In its official disclosure, the regulatory watchdog confirmed the amendment, saying that firms offering custodial services to Dubai’s residents can stake the digital currencies in their possession. The new rules apply only to firms licensed by VARA and eliminate companies needing additional licensing from the regulator.
Staking allows owners of digital currencies to earn returns on their holdings, available on networks relying on a Proof-of-Stake (POS) consensus mechanism with assets used to verify transactions.
Before the rulebook amendment, virtual asset service providers (VASPs) in Dubai had to obtain a license for management and investment services to offer staking services to their customers.
“VASPs licensed to carry out Custody Services may now, with specific additional approval from VARA, provide staking services to their customers from the same legal entity and without obtaining a separate licence for VA Management and Investment Services,” read VARA’s statement.
VARA clarifies that while custodial firms do not need to go through the hurdles of applying for a staking license, they will be required to make payments of “supervision fees” to their regulator.
The decision is poised to boost Dubai’s attractiveness to global digital currency providers seeking new jurisdictions to set up operations. Currently, the emirate has onboarded exchanges including Binance, Konaimu, and Crypto.com, and is not showing any sign of slowing down.
With its proactive regulatory stance, VARA is at the center of Dubai’s digital transformation. Since its establishment in 2022, VARA has spearheaded Dubai’s Web3 resurgence via a string of regulations, including the establishment of comprehensive rules for market participants and a schedule of fees.
“Dubai has a vibrant digital asset ecosystem and impressive talent pool, and we are proud to contribute to the growth of this innovative financial hub,” said Sebastian Widmann, Komainu’s Head of Strategy. “Our presence and desirable regulatory status in the region marks another differentiator for us as we execute the next phase of our business.”
VARA has no room for non-compliance
Despite its drive to attract global firms to Dubai, VARA maintains high standards in issuing operational licenses to potential service providers. In July, VARA announced the suspension of BitOasis’ conditional permit for failing to meet certain conditions in a show of regulatory strength.
The regulator has also taken enforcement measures against OPNX and its founders for breaching extant rules on digital currency promotions by imposing hefty fines. VARA moved to revoke FTX’s minimum viable product (MVP) license in November 2022 as the exchange faced a liquidity crisis.
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