By
Tolu Ajiboye
April 18th, 2024
To obtain a regulatory license in Dubai through VARA, crypto companies must first pay the initial approval fees, which amount to approximately AED 1,035, equivalent to $282, along with a registration fee of AED 9,020, which is about $2,456.
During the Paris Blockchain Week event that began on April 9, 2024, Matthew White, the CEO of Dubai’s newly established Virtual Asset Regulatory Authority (VARA), announced plans to alleviate the regulatory challenges small crypto companies face in the region.
Speaking at a regulatory panel discussion during the event, White acknowledged that current legislation for digital assets needs improvement to lessen the burden for small start-ups entering the emerging economy. As a result, he told the regulatory panel that he plans to enhance the rules and make them more lenient to accommodate these companies.
Cost of Crypto Regulation in Dubai
One of the strategies he proposed to ease the pressure on small crypto companies includes the reduction of financial burdens on them. According to the VARA chair, reducing the cost of compliance will create a more supportive environment for their operations.
“It’s not perfect. There’s a number of things I’m looking at, at the moment to try and make the regime fit for everybody. One of those is figuring out a way to deal with the costs of compliance for smaller entities,” White said.
To obtain a regulatory license in Dubai through VARA, crypto companies must first pay the initial approval fees, which amount to approximately AED 1,035, equivalent to $282, along with a registration fee of AED 9,020, which is about $2,456.
Additionally, these firms must pay a Memorandum of Association (MOA) fee of AED 2,020, valued at around $550. In total, crypto firms seeking legal entry into the Dubai market will incur costs totaling approximately $6,420 to secure the license and become fully operational.
A Potential Solution to High Regulatory Costs
White described obtaining the license as a “costly exercise”, noting that many individuals lack the necessary resources to acquire it. He also proposed a potential solution to the regulatory burden, suggesting a market structure where more prominent participants could “host” smaller ones. Under this arrangement, entities with greater resources would shoulder the financial burden of compliance.
“The cost of compliance is covered by the larger systemic players, allowing smaller entities to enter the ecosystem, be regulated, and not bear the same level of compliance costs,” he told the panel.
The VARA official said that examining scenarios like the high cost of regulation is part of the regulator’s journey toward fostering innovation while implementing necessary legislation. White became VARA’s chief in November last year, succeeding former CEO Henson Orser. At the time, the Dubai regulatory body announced that White’s leadership marked a step in the Emirates’ preparations to transition into full-scale market operations.