VARA Licence Categories: Which One You Actually Need

Token nature is a separate rights test — what the holder can demand, transfer, redeem, vote, and expect as profit — and it does not pick the VARA activity. UAE company formation and licensing starts with this map because the commercial licence, the VARA activity list, the compliance pack, and the banking file have to describe the same desk.

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What does a VARA licence authorise?

Dubai Law No. (4) of 2022 created the Dubai Virtual Assets Regulatory Authority and applied it to Virtual Asset services in every Dubai zone, including free zones, with the Dubai International Financial Centre carved out. Article (16) of that Law lists seven statutory Activities and lets VARA classify and define them. The live licence overlay is Schedule 1 of the 2023 Regulations, HTML effective 19 June 2025: Advisory Services, Broker-Dealer Services, Category 1 VA Issuance, Custody Services, Exchange Services, Lending and Borrowing Services, VA Management and Investment Services, and VA Transfer and Settlement Services.

A Licence, in Schedule 4, is a grant under which VARA authorises an Entity to carry out one or more of those VA Activities in the Emirate. Part III A.1 then prohibits carrying out a VA Activity by way of business, or purporting to do so, unless the Entity is Licensed for that activity, is an employee of a Licensed VASP, or is an Exempt Entity. “By way of business” sits in VARA’s discretion. The factors it will weigh are holding out, regularity, scale and continuity, and a commercial element such as remuneration or value in kind.

VARA’s licensed-activities page states that a VASP can aggregate several of those activities under one overarching licence, except where Custody Services are concerned. Custody is the only activity that must sit in a distinct legal entity with a standalone licence. Licensed VASPs cannot run proprietary trading, or the Group’s own book, under the regulated-activity licence. Proprietary trading is a No Objection Certificate path, with mandatory registration if own-book volume hits USD 250,000,000 equivalent in any rolling thirty calendar days.

The category picker is not a fee schedule. Government application and supervision fees sit in Schedule 2 of the 2023 Regulations. The realistic elapsed timeline for a UAE crypto licence is a separate question — the stages and what stretches them are different from the activity pick.

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Which eight VA Activities sit in Schedule 1?

Read the desk first, then the Schedule. Marketing copy that says “exchange”, “wallet”, or “earn” does not name the VA Activity. Schedule 1 does, with footnotes that change the overlay: a personal-recommendation test for Advisory, a six-limb list for Broker-Dealer, a separate-wallet test for Custody, an order-book limb for Exchange, and a staking example under VA Management and Investment.

VARA’s licensed-activities page adds operating rules the Schedule does not collect in one place: multi-activity aggregation except Custody, a standalone custody company, and a proprietary-trading NOC. Use both instruments. Each Schedule 1 activity below maps to the desk, the 2026 overlay, and the fail that still shows up in packs. Dated 18 August 2026. Every VASP also takes the four compulsory rulebooks (Company; Compliance and Risk Management; Technology and Information; Market Conduct). Confirm the live HTML before you file.

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Advisory Services

The desk gives a personal recommendation to a client, on request or on the Entity’s initiative, about a VA action or transaction, after weighing knowledge, objectives, and financial circumstances. Overlay: Advisory Services Rulebook. Professional Exemption may cover incidental lawyer, accountant, or licensed-consultant work. Common fail: a Telegram “outlook” that names a buy, sized to the follower’s book, filed as “content”.

Broker-Dealer Services

Arranges orders; solicits or accepts orders against fiat or Virtual Assets; matches buyers and sellers; deals as principal; makes a market using client assets; or places or distributes an issuance. Overlay: Broker-Dealer Services Rulebook. Limb (f) is the usual Licensed Distributor seat for Category 2 issuance. Common fail: OTC desk labelled Advisory; order book labelled Broker-Dealer when Exchange limb (d) fits.

Category 1 VA Issuance

Issues a Fiat-Referenced Virtual Asset, an Asset-Referenced Virtual Asset, or another Virtual Asset VARA has placed in Category 1. Overlay: VA Issuance Rulebook: licence plus Whitepaper approval. FRVA and ARVA annexes apply on top. Common fail: Dubai-issued FRVA or ARVA filed as Category 2 “because a distributor will list it”.

Custody Services

Safekeeps Virtual Assets for another Entity and acts only on verified instructions. Separate client VA Wallets are the qualification test. Overlay: Custody Services Rulebook, in a distinct legal entity with a standalone licence. Other VASPs still face storage rules without becoming custodians. Common fail: exchange or broker holding client keys “for convenience” without the segregated company.

Exchange Services

Converts VA and fiat; converts one VA for another; matches orders and conducts that conversion; or keeps an order book in furtherance of those conversions. Overlay: Exchange Services Rulebook. Common fail: matched-principal OTC book sold as an “exchange”; conversion widget that is Transfer with a price feed.

Lending and Borrowing Services

Contract under which a Virtual Asset is lent and the borrower commits to return the same, on request during or at the end of the agreed period. Overlay: Lending and Borrowing Services Rulebook. Common fail: “Earn” product that is a loan, filed as staking; rehypothecation of custody assets.

VA Management and Investment Services

Agent, fiduciary, or other responsibility for managing, administering, or disposing of another Entity’s Virtual Assets. Schedule 1 names investment management and staking for validator or node fees. Overlay: Management and Investment Services Rulebook. Common fail: yield product sold as Advisory; protocol staking run from the exchange company with no management overlay.

VA Transfer and Settlement Services

Transmission, transfer, and/or settlement of Virtual Assets from one Entity to another, or to another VA Wallet, address, or location. Overlay: Transfer and Settlement Services Rulebook. Cabinet 134/2025 and the Travel Rule attach to the rail; they do not pick the category. Common fail: “Payments” or “wallet” UI that moves client assets, filed as a technology registration.

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Sources for this map: Schedule 1 HTML and the licensed-activities page on vara.ae, both live on 18 August 2026.

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Advisory or Broker-Dealer: where a recommendation becomes an order

A personal recommendation and an order sit one sentence apart in a client chat. Schedule 1 treats them as different VA Activities. Advisory is a personal recommendation to a named client, on request or on the Entity’s initiative, after the desk has weighed that client’s knowledge, objectives, and ability to bear losses. Broker-Dealer starts when the desk arranges or accepts an order, takes fiat or Virtual Assets against it, matches two sides, deals as principal, makes a market in client assets, or places an issuance. File the overlay that matches Monday’s work.

When Advisory Services is the overlay

Advisory is a suitability conversation with a named client. A public market note or a general risk warning does not become Advisory because the author is based in Dubai. It becomes Advisory when the author sizes the trade to that client’s circumstances and tells the client what to do.

Part IV A.5 carves out a Professional Exemption for duly registered practising lawyers, accountants, and other professionally licensed business consultants, where the VA Activity is wholly incidental to their practice, they remain authorised by a competent professional body in the Emirate, and they keep the indemnity insurance their profession requires. VARA keeps sole discretion on whether the exemption was used in the right place. A consultancy that sells a standing “crypto allocation” product to Dubai clients is outside that carve-out.

If the same firm then places the order, takes the client’s USDT, or runs the RFQ, the second overlay is Broker-Dealer. Dual activity is allowed on one licence if Custody is not in the mix. Each activity still has to be met in full.

When Broker-Dealer Services is the overlay

Broker-Dealer is the order, the match, the principal book, and the issuance placement. Schedule 1 limb (a) arranges between two Entities. Limb (b) solicits or accepts orders against fiat or Virtual Assets. Limb (c) facilitates a match. Limb (d) deals as a dealer on the Entity’s own account. Limb (e) makes a market using client assets. Limb (f) is placement, distribution, or other issuance-related services to issuing clients, with a cross-reference to the VA Issuance Rulebook.

Limb (f) is why a Category 2 issuer still needs a Licensed Distributor in Dubai. The issuer may have no VASP licence. The distributor does, and the Issuance Rulebook puts assurance of the issuer’s compliance on that distributor. Self-distribution of a Category 2 token from a Dubai channel, without that distributor, skips the overlay the Rulebook named.

The overlap with Exchange is the usual filing error. An order book plus conversion is Exchange. A desk that arranges or deals without conducting the conversion as an exchange, and without maintaining that order book, stays in Broker-Dealer. If both are true, file both.

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Exchange or Transfer and Settlement: matching versus moving

Founders collapse “we move crypto” into one licence line. Schedule 1 splits the work. Exchange Services is a conversion: Virtual Asset to fiat, Virtual Asset to Virtual Asset, a match that then conducts that conversion, or an order book kept in furtherance of those conversions. VA Transfer and Settlement Services is a transmission, a transfer, and/or a settlement from one Entity to another, or from one Entity to another VA Wallet, address, or location. A payments company, a withdrawal rail, and a conversion venue can sit in the same group. They are still different VA Activities, and VARA’s licensed-activities page requires each licensed activity to be met in full.

Exchange Services

Exchange limb (a) is the fiat on-ramp and off-ramp. Limb (b) is the VA/VA pair. Limb (c) is matching and converting. Limb (d) is the order book that supports (a)–(c). A venue that displays prices, matches two clients, and executes the conversion is in this box even if the landing page says “OTC” or “desk”. A venue that only introduces two names and never touches the conversion is closer to Broker-Dealer limb (a) or (c).

Licensed VASPs cannot run the Group’s proprietary book under this overlay. Mixing client flow and house flow in one Dubai entity is the fail that banks and VARA both read.

A US-incorporated group that carries on Exchange Services in or from Dubai, excluding DIFC, still needs this overlay. Serving Dubai residents from a California server, or holding the firm out from a Dubai free-zone office, is the Part III A question. FinCEN registration, if any, does not replace Schedule 1.

VA Transfer and Settlement Services

Transfer and Settlement is the rail. The definition does not require a conversion. A VASP that accepts an instruction to push native units from a client wallet to another address, or that settles a trade without operating the order book, is in this box. Wallet software that never moves assets for clients is closer to a technology registration under Part IV A.8, which is voluntary and is not a licence to carry on VA Activity.

Federal AML law still attaches to the rail. Cabinet Resolution No. (134) of 2025, Article 4, is a federal AML activity list, including transfer and exchange. Crypto compliance in 2026 covers that overlay. The VARA file still has to name Transfer and Settlement if that is the desk. Travel Rule controls live in VARA’s Compliance and Risk Management Rulebook and in the federal AML instruments. They sit on whichever VA Activity moves value. They do not create a ninth category.

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Custody: the activity that must sit in its own company

Custody Services, in Schedule 1, means safekeeping Virtual Assets for or on behalf of another Entity and acting only on verified instructions from or on behalf of that Entity. The footnote is the qualification test: all VASPs face rules on storage and custody of clients’ Virtual Assets; only VASPs that segregate each client’s assets in separate VA Wallets qualify for a Custody Services Licence, unless the Custody Services Rulebook permits another arrangement.

VARA’s licensed-activities page then adds the corporate consequence. Custody is the only regulated activity that must be segregated from the other licence categories. A VA Custodian must be set up as a distinct legal entity with a standalone licence. You can put Exchange and Broker-Dealer on one VASP. You cannot fold Custody into that same company because the landing page called it a “wallet”.

The common fail is convenience. An exchange that holds withdrawal keys, or a broker that settles internally, is taking custody. If the entity holds client assets and takes verified instructions, the overlay is Custody, in its own company. Other VASPs still reconcile and record. Copying a custody policy into the exchange pack does not make them a custodian.

Ksenia Babochkina, Commercial Director at Medici Expert: “We map jurisdiction options against banking access first, because a license without a working bank account is just a certificate on a wall.”

A custody company that cannot open the fiat and VA accounts the safekeeping model requires will sit on that wall. Build the banking file for the segregated entity, not only for the exchange.

AML, KYC and risk documentation has to describe the same segregation the licence file describes. A policy that says “we do not take custody” while operations hold keys will fail both reviews.

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Category 1 VA Issuance, Category 2, and Exempt VAs

Schedule 1 treats only Category 1 VA Issuance as a VA Activity. Category 2 and Exempt issuances live in the Virtual Asset Issuance Rulebook, effective 19 June 2025. Category 1 covers FRVAs, ARVAs, and other Virtual Assets VARA determines, and needs a VARA Licence plus Whitepaper approval. Category 2 is any issuance that is neither Category 1 nor Exempt: no VASP licence, but every placement and distribution through a Licensed Distributor. Exempt VAs are Non-Transferable Virtual Assets, Redeemable Closed-Loop Virtual Assets, or others VARA determines: no prior requirements, still Part II rules and Part IV supervision.

Category 1: FRVA, ARVA, and VARA-determined issuances

Rule I.D.1 of the Issuance Rulebook is a prohibition: no Entity in the Emirate may carry out Category 1 VA Issuance unless it is authorised and Licensed for that issuance. FRVA issuers also take Annex 1. ARVA issuers also take Annex 2. VARA may revoke the licence if the Virtual Asset is not issued within six months of approval, if the licence was obtained on false or misleading statements including in the Whitepaper, or on the other I.D.7 grounds, including insolvency and Good Cause.

Part II B of the 2023 Regulations sits next to this overlay. VARA may classify a Virtual Asset, or a type of Virtual Asset, as prohibited in the Emirate, as regulated by the CBUAE, or by interpretation. UAE-CBDCs remain under the Central Bank. A founder who treats a dirham-referenced unit as an ordinary Category 2 community token files the wrong instrument. Token legal structuring for the unit itself sits on digital assets and tokenization support. The licence question for a Category 1 issuance remains the VASP overlay.

Category 2 and Exempt: no VASP licence, still VARA paper

Rule I.E.2 says Category 2 issuers do not need prior approval from VARA if placement and distribution run through a Licensed Distributor. The distributor assumes responsibility for assuring and validating that the issuer complies with the Issuance Rulebook. No Category 2 Virtual Asset is deemed approved by VARA. VARA’s licensed-activities page still tells those issuers to complete an Issuance Approval Form [Category-2], with purpose, use, issuer details, a Whitepaper, AML/CFT, and technical controls. Anonymity-enhanced tokens are prohibited. File the form the page names even where I.E.2 waives prior approval.

Exempt VAs may be issued without prior approval, provided the issuer complies with Part II of the Issuance Rulebook at all times. Issuers of Exempt VAs remain subject to VARA’s supervision, examination, and enforcement under Part IV of that Rulebook. A closed-loop points unit that later becomes transferable can fall out of Exempt. Rule I.C.3 requires the issuer to meet the new category’s requirements, including a Licence and Whitepaper approval where necessary, before the change takes effect.

EU CASP authorisation under MiCA is a different service list in a different statute. What MiCA means for every company covers that perimeter. A MiCA white paper does not pick a VARA issuance category.

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Lending, borrowing, and VA Management and Investment

Lending and Borrowing Services is a contract. A Virtual Asset moves from lender to borrower. The borrower commits to return the same, at the lender’s request, at any time during or at the end of the agreed period. The overlay follows that contract, including “flexible” products that let the client call the asset back. Rehypothecation of assets held in Custody is a second overlay problem: the custody company is supposed to act only on verified instructions, in separate wallets. Lending those units into a pool is a new VA Activity.

VA Management and Investment Services is responsibility for another Entity’s Virtual Assets: as agent, as fiduciary, or otherwise taking on management, administration, or disposition. Schedule 1 gives two examples: investment management, and staking of Virtual Assets to earn fees or other amounts paid to validators or node operators of a proof-of-stake DLT. A liquid-staking product, a strategy vault, and a discretionary VA portfolio sit here even if the front end says “earn” or “yield”. Advisory recommends. Management decides and disposes.

The fail is labelling. Staking as a pooled fiduciary service is Management. A loan of the same units, with an obligation to return the same, is Lending. An exchange that auto-stakes idle customer balances without a Management overlay, and without client instructions that meet the Custody footnote, stacks three activities into one company. File the ones you will perform.

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What is not a VARA category

Cabinet 134/2025 Article 4 tells federal AML supervisors which Virtual Asset operations bring a person into the VASP definition for AML purposes. You can sit in Article 4 and still need a Dubai overlay, or sit outside Dubai and still need federal AML controls. Use the compliance article for that list.

DIFC and ADGM are different perimeters. Law No. (4) of 2022 Article 3 excludes the Dubai International Financial Centre. Inside DIFC the Dubai Financial Services Authority licenses Financial Services; Crypto Token suitability rules under GEN have been in force since 12 January 2026, and Investment Tokens remain a separate GEN taxonomy. In Abu Dhabi Global Market the Financial Services Regulatory Authority authorises FSMR Regulated Activities and then approves the use of Virtual Assets inside them. The June 2025 Virtual Asset Activities guidance (VER07.100625) names dealing as principal or agent, advising, arranging, managing assets, providing custody, and operating a multilateral trading facility. Those labels are FSRA permissions. An FSRA MTF permission does not become a VARA Exchange licence by opening a Dubai branch. Pick the financial free zone or the VARA perimeter, then build the entity that zone requires.

Proprietary trading is not a VA Activity. Large own-book traders register. Others may seek a NOC through the commercial licensor’s IDQ. DLT technology providers may register voluntarily under Part IV A.8. Registration is not authorisation to carry on Schedule 1 work. Exempt Entities, in Schedule 4, are UAE or Dubai government entities and their public, non-profit, and charitable bodies. They still notify VARA, obtain confirmation of status, and take a no-objection before carrying on VA Activities.

Part II B classification of a Virtual Asset as prohibited, as CBUAE-regulated, or by interpretation is a decision about the unit. The licence is a decision about the desk.

A “Category 4 licence” in UAE search results is a DET mainland commercial class. It does not appear in Schedule 1.

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How to pick the overlay you file

Write down the flows in one sitting: who the client is, what instruction arrives, whether you convert, whether you hold keys, whether you lend or stake, whether you issue, and where the fiat lands. Match each flow to a Schedule 1 row. If two rows fit, file two, unless one of them is Custody, in which case split the company. If no row fits, you may be outside the perimeter, or you may be holding out as a VASP without a VA Activity, which Part III A.3 also prohibits.

Nataly Medici, Managing Partner and CEO at Medici Expert: “We tell clients early: a license rejected for sloppy documentation is harder to recover from than one that was never filed.”

A pack that names Exchange while the product screenshots show a loan, or that names Advisory while the CRM books RFQs, is that sloppy file. VARA’s applications page still runs two stages: an Initial Disclosure Questionnaire through DET or a Dubai free zone, excluding DIFC, then an Approval to Incorporate, then the VASP Licence. ATI lets you incorporate and rent the office. It does not let you carry on VA Activities.

The four compulsory rulebooks attach to every VASP. The activity rulebook attaches to each overlay you ticked. Capital sits in Part IV of the Company Rulebook; confirm the live figure for your mix. Building real rules for crypto is the difference between a heading in the business plan and a control the MLRO can operate. The licence overlay, the AML pack, and the account application have to tell one story about the desk.

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FAQ

What is a VARA licence?

A VARA Licence is an authorisation, under the 2023 Regulations, to carry out one or more Schedule 1 VA Activities in Dubai, including free zones, excluding DIFC. The public corporation that issues it was created by Dubai Law No. (4) of 2022. Holding a commercial or free-zone licence, or an Approval to Incorporate, is not permission to carry on those activities.

How many VARA licence categories are there in 2026?

Eight VA Activities sit in Schedule 1 as of 18 August 2026: Advisory, Broker-Dealer, Category 1 VA Issuance, Custody, Exchange, Lending and Borrowing, VA Management and Investment, and VA Transfer and Settlement. Older posts that count six miss Transfer and Settlement and Category 1 issuance.

Do I need a VARA licence to issue a token in Dubai?

Category 1 issuance (FRVA, ARVA, or VARA-determined) needs a VASP licence and Whitepaper approval. Category 2 needs a Licensed Distributor and the Issuance Approval Form the licensed-activities page still names; the issuer does not need its own VASP licence. Exempt VAs need no prior approval and remain under Part II and Part IV of the Issuance Rulebook.

Can one company hold several VARA activities?

Yes, except Custody Services. VARA’s licensed-activities page requires a VA Custodian to be a distinct legal entity with a standalone licence. Multi-activity VASPs must meet each activity in full. Proprietary trading cannot sit under the regulated-activity licence.

Is an ADGM or DIFC permission a VARA category?

No. DIFC is carved out of Law 4/2022. DFSA and FSRA permissions are financial-free-zone perimeters with their own activity lists. They do not appear as rows in Schedule 1. A group that wants both a Dubai VARA overlay and an ADGM Financial Services Permission builds two entities, each under its own supervisor.

Does Cabinet Resolution 134/2025 tell me which VARA category to file?

No. Article 4 is a federal AML list of Virtual Asset operations. It can put you in the federal VASP definition for AML purposes without picking Advisory versus Exchange versus Transfer. Use it beside Schedule 1, not instead of Schedule 1.

How much does a VARA licence cost?

Government application and supervision fees sit in Schedule 2 of the 2023 Regulations and change with the activity mix. That schedule is not the all-in cost of substance, people, systems, and banking. Confirm the live Schedule 2 line for the overlays you will file.