Dubai’s VARA grants Komainu full operating license after rigorous process

Getting your Trinity Audio player ready...

Custody service provider Komainu has received a full operating license from Dubai’s Virtual Asset Regulatory Authority (VARA), allowing it to offer a wider range of services to its institutional clients.

After a lengthy process spanning nearly 12 months, VARA granted a digital asset service provider license on Komainu. In July 2022, Komainu obtained provisional regulatory approval and followed it up with a minimal viable product (MVP) permit in November.

With the full license, the firm says it will roll out a suite of services for clients outside its traditional custody offering. It also has plans to launch institutional staking and collateral management services for enterprise clients in Dubai.

“We see tremendous opportunities to scale our business here amid a significant boom in assets driven by fund formation and exchange launches,” said Komainu’s Head of Strategy, Sebastian Widmann.

Komainu, launched in 2018 as a joint venture between Japan-based Nomura (NASDAQ: NRSCF) and CoinShares (NASDAQ: CNSRF), announced a Dubai-based entity in compliance with VARA’s regulatory requirements. The firm disclosed that it will use the momentum from the receipt of the license to expand to new jurisdictions in the Middle East.

“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 Widmann. “Our presence and desirable regulatory status in the region marks another differentiator for us as we execute the next phase of our business.”

Komainu currently operates in Singapore, Dublin, and London. It remains unclear whether the firm will pursue registrations in North America.

Since the middle of 2022, several firms have followed Komainu to seek licensing in Dubai, including Binance, OKX, BitOasis, and the defunct FTX exchange. Dubai’s clear digital currency rules, low taxes, talent pool, and extensive regulatory compliance support attract the firms.

VARA’s carrot-and-stick approach to regulation

Despite VARA’s seemingly friendly stance toward the asset class, the regulators have reiterated its commitment to uphold high compliance standards.

In July, the digital currency watchdog revoked BitOasis’ conditional license for failing to comply with stipulated requirements, with the affected exchange pledging to “remediate all outstanding post-licensing conditions.”

The regulators have imposed hefty fines on OPNX and its executives for failing to follow the rules on digital currency promotions as it considers proceeding with a full-scale lawsuit.

Watch: Dubai hub is putting BSV blockchain on the map in the Middle East