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  • Part VI – Capital and Prudential Requirements

    • A. Application

        1. VASPs shall comply with the Rules in this Part VI of this Company Rulebook [Capital and Prudential Requirements].
       

    • B. Paid-Up Capital

      1. VASPs shall, at all times, hold and maintain paid-up capital in the following amounts [Paid-Up Capital]—
       
      VA Activity Paid-Up Capital Requirement
      Advisory Services AED 100,000.
      Broker-Dealer Services Broker-Dealer Services using a VASP Licensed by VARA to provide Custody Services or otherwise approved during the licensing process: the higher of [i] AED 400,000; or [ii] 15% of fixed annual overheads.
      In all other instances, the higher of [i] AED 600,000; or [ii] 25% of fixed annual overheads.
      Custody Services The higher of [i] AED 600,000; or [ii] 25% of fixed annual overheads.
      Exchange Services Exchange Services using a VASP Licensed by VARA to provide Custody Services or otherwise approved during the licensing process: the higher of [i] AED 800,000; or [ii] 15% of fixed annual overheads.
      In all other instances, the higher of [i] AED 1,500,000; or [ii] 25% of fixed annual overheads.
      Lending and Borrowing Services The higher of [i] AED 500,000; or [ii] 25% of fixed annual overheads.
      VA Management and Investment Services VA Management and Investment Services using a VASP Licensed by VARA to provide Custody Services or otherwise approved during the licensing process: the higher of [i] AED 280,000; or [ii] 15% of fixed annual overheads.
      In all other instances, the higher of [i] AED 500,000; or [ii] 25% of fixed annual overheads.
      VA Transfer and Settlement Services The higher of [i] AED 500,000; or [ii] 25% of fixed annual overheads.

       

      2. Where a VASP is Licensed by VARA to carry out more than one VA Activity, the VASP must hold the amount of Paid-Up Capital specified in Rule VI.B.1 of this Company Rulebook for each VA Activity for which the VASP is Licensed. In such instances, the VASP shall calculate the Paid-Up Capital required for each VA Activity using the fixed annual overheads for that VA Activity only, provided that in combination all Paid-Up Capital is mutually exclusive and collectively exhaustive such that the total fixed annual overheads of the VASP are accounted for in aggregate. VASPs must reconcile Paid-Up Capital on a monthly basis.
      3. Paid-Up Capital shall, at all times, be held and maintained in—
       
        a. a trust account with a licensed bank in the UAE with VARA stated as the beneficiary;
        b. a surety bond furnished by a surety company authorised to conduct business in the UAE, which shall have no end date and state VARA as a beneficiary; or
        c. any other manner as may be specified by VARA upon granting a Licence.
       

    • C. Net Liquid Assets

      1. VASPs shall at all times hold and maintain sufficient current liquid assets such that their surplus over current liabilities is worth at least 1.2 times their monthly operating expenses [Net Liquid Assets] as represented by the following calculation—
       
      Net Liquid Assets ≥ 1.2 x monthly operating expenses
       
      2. When calculating their Net Liquid Assets under Rule VI.C.1 of this Company Rulebook, VASPs must include such portion of their Operational Exposure to Virtual Assets [as agreed with VARA as a condition of their Licence] in their current liabilities, for the purposes of calculating their current liabilities.
      3. Net Liquid Assets shall be reconciled on a daily basis and reported to VARA monthly.
      4. Net Liquid Assets may be maintained in the following assets only—
       
        a. cash and cash equivalents, as defined in internationally recognised accounting standards; and
        b. Fiat-Referenced Virtual Assets referencing USD [or AED as approved by VARA] and where such Fiat-Referenced Virtual Assets, in all events, are backed by cash or cash equivalent [as defined in internationally recognised accounting standards] reserves denominated in the fiat currency referenced of not less than the market value of the Fiat-Referenced Virtual Asset in public circulation, or not yet redeemed.
       

    • D. Insurance

      1. VASPs must hold and maintain the following types of insurance adequate to the size and complexity of the business and VA Activities and in the manner specified by VARA in its Licence [Insurance]—
       
        a. professional indemnity insurance;
        b. directors’ and officers’ insurance;
        c. commercial crime insurance or similar types of insurance for all Virtual Assets stored in hot wallets; and
        d. any other type of insurance as assessed by VARA to be appropriate for a VASP’s business and VA Activities and stipulated in the conditions to its Licence.
       
      2. All Insurance must be held and maintained with a regulated insurer.
      3. Insurance may be held in the name of another Entity in the VASP’s Group, provided that the relevant policy—
       
        a. explicitly states the VASP as an insured party; and
        b. states the level of cover applicable to the VASP.
       
      4. VARA may apply discretion during the licensing process if, for proven and demonstrated reasons the requirements in Rule VI.D.1 of this Company Rulebook cannot be met, provided that VASPs shall be required to protect against the risks that such Insurance is designed to cover through other means which will be specified by VARA as a condition of a Licence.
       

    • E. Reserve Assets

      1. VASPs shall, at all times, maintain reserve assets equivalent to one hundred percent [100%] of the liabilities owed to clients with respect to all VA Activities [Reserve Assets].
      2. VASPs must hold Reserve Assets on a one-to-one basis in the same Virtual Asset that liabilities are owed to its clients.
      3. Reserve Assets must be reconciled on a daily basis and audited by an independent third-party auditor no less than every six [6] months. VASPs shall include such audit reports as part of the subsequent quarterly report to VARA required in the Compliance and Risk Management Rulebook.
       

    • F. Notifications and other Requirements

      1. VASPs shall notify VARA immediately if, at any time, it is unable to maintain or fails to meet the Paid-Up Capital, Net Liquid Assets, Insurance or Reserve Assets requirements above and such notification shall include details of—
       
        a. all deficit amounts;
        b. the causes of the failure;
        c. remedial actions that have been, and will be, taken to rectify the breach; and
        d. the expected timeline for such remedial actions to be completed.
       
      2. VASPs shall provide updates to VARA on a daily basis in respect of any notification under Rule VI.E.1 of this Company Rulebook above, unless otherwise directed by VARA or until the VASP confirms and VARA is satisfied that it has rectified all failures and is in compliance with all requirements.
      3. Notwithstanding all other requirements in the Compliance and Risk Management Rulebook, VASPs shall establish and maintain clear procedures to monitor and identify all sources of risks or potential risks that may impact its operation and shall consider the potential adverse impact of such risks on its level of Paid-Up Capital, Net Liquid Assets, Insurance or Reserve Assets.
      4. VARA may require VASPs to hold and maintain additional Paid-Up Capital, Net Liquid Assets, Insurance or Reserve Assets based on the size, scope, geographic exposure, complexity and nature of the VA Activities and operations of a VASP.