Part I – Licence, Approval and Registration Requirements
A. General Requirement
1. Any Entity in the Emirate that issues a Virtual Asset in the course of a business, must comply with this VA Issuance Rulebook, as may be amended by VARA from time to time. 2. “In the course of a business” requirement. For the purposes of Rule I.A.1 of this VA Issuance Rulebook, in determining whether an Entity has issued a Virtual Asset in the course of a business, VARA shall retain sole and absolute discretion, with the following factors forming part of the consideration criteria—
a. whether the Entity holds itself out as issuing the Virtual Asset in the course of a business; b. the regularity, scale and periodicity with which the Entity issues Virtual Assets; c. whether there is any direct or indirect commercial element to the Virtual Asset, or in how the Virtual Asset is issued, whether the Entity receives remuneration, incentive or other value in kind benefit, or if it is related to any commercial or business activity in any way; d. includes not-for-profit, non-profit and charitable organisations, foundations, associations and associated activity[ies]; e. VA issuances that do not fall under Category 1, and are carried out solely for personal, non-commercial use, will not be deemed to be issued in the course of a business; and f. Category 1 VA issuances are, in all events without exception, deemed to be carried out in the course of a business.
3. VARA will, from time to time, assign categorisations to the issuance of certain types of Virtual Assets depending on the nature of the issuance, the Virtual Asset or types of Virtual Assets. VARA may impose further specific or nuanced requirements on such issuances which, unless otherwise stated, will apply in addition to the requirement for the Issuer to obtain a Licence or prior approval from VARA. B. Prohibited Virtual Assets
1. As specified in the Regulations, issuing Anonymity-Enhanced Cryptocurrencies and all VA Activity[ies] related to them are prohibited in the Emirate.
C. VA issuance categories and prior requirements
1. VA issuances in the Emirate are categorised, along with the applicable requirement prior to the Virtual Asset being issued, as follows—
Category Applicable types of VA issuances Prior requirement Category 1 issuance of—[i] Fiat-Referenced Virtual Assets [FRVAs], defined as types of Virtual Assets that purport to maintain a stable value in relation to the value of one or more fiat currencies, but do not have legal tender status in any jurisdiction, as more fully defined in the FRVA Rules. For the avoidance of doubt, and as stated in Rule B.3I.B.3 of the FRVA Rules, the issuance of any FRVA that purports to maintain a stable value in relation to the value of AED shall not be approved under this VA Issuance Rulebook and the FRVA Rules and shall remain under the sole and exclusive regulatory purview of the CBUAE; or [ii] other Virtual Assets as may be determined by VARA
from time to time.VARA Licence Category 2 All issuances which do not constitute a Category 1 VA issuance,
and—[i] by or involving Designated Non-Financial
Businesses and Professions [DNFBPs]; or[ii] which satisfy any of the following— [a] a single transaction exceeding AED 40,000, or the equivalent amount in another fiat currency or Virtual Assets; [b] offered to one hundred and fifty [150] Entities or more, where such Entities are acting on their own account; or [c] over a period of twelve [12] months, starting with the beginning of the issuance, the total consideration, direct or indirect benefit, accrued to the Issuer exceeds AED 2,000,000, or the equivalent amount in another fiat currency or Virtual Assets. Approval of the Issuer 2. When determining the category of a VA issuance, VARA will consider all factors it deems appropriate in respect of such issuance, including the nature of all Virtual Assets or types of Virtual Assets involved. 3. If any change proposed to be made to a Virtual Asset may result in its issuance no longer qualifying under the original categorisation in Rule I.C.1 of this VA Issuance Rulebook, the Issuer must comply with all requirements of the category under which the Virtual Asset will fall after such change is made. The Issuer must ensure all such future requirements are met prior to any proposed changes to the Virtual Asset taking effect which, for the avoidance of doubt, shall include the Issuer obtaining a Licence or prior approval from VARA where necessary. D. Category 1 VA issuance
1. No Entity in the Emirate may carry out a Category 1 VA issuance, unless it is authorised and Licensed by VARA for the VA issuance. 2. As stated in the Regulations, carrying out a Category 1 VA issuance is a VA Activity. In addition to compliance with this VA Issuance Rulebook and all other Regulations, Rules and Directives as communicated by VARA in its Licence, or otherwise from time to time, any Entity seeking to carry out a Category 1 VA issuance will be required to comply with the following Rulebooks—
a. Company Rulebook; b. Compliance and Risk Management Rulebook; c. VARATechnology and Information Rulebook; and d. Market Conduct Rulebook.
3. For the avoidance of doubt, all Rules in Rulebooks apply cumulatively in addition to all other requirements in the Regulations, Rules and Directive and as such, in the event of overlap the highest standard of compliance must be met at all times. 4. Licensing process. All Entities seeking a Licence from VARA to carry out a Category 1 VA issuance shall adhere to the licensing process as prescribed by VARA from time to time when applying for the Licence. 5. FRVA Rules. Any Entity seeking to carry out the issuance of an FRVA will, in addition to compliance with all other Regulations, Rules and Directives as communicated by VARA in its Licence or otherwise from time to time, be required to comply with the FRVA Rules in ANNEX 1: FIAT-REFERENCED VIRTUAL ASSETS ISSUANCE RULES of this VA Issuance Rulebook at all times. E. Category 2 VA issuance
1. No Entity in the Emirate may carry out a Category 2 VA issuance, unless it has obtained prior approval from VARA to carry out such VA issuance. 2. Approval process. An Entity seeking to obtain approval from VARA to issue a Virtual Asset under Rule I.E.1 of this VA Issuance Rulebook will be required to provide all relevant information as requested by VARA in the approval process, including but not limited to the following—
a. the purpose and/or use of the Virtual Asset; b. the nature of the business and/or activities for which the Virtual Asset will be used; c. the Whitepaper; d. the identity, full details and, if applicable, ownership of the Issuer, including a description of its experience and whether it, or its relevant individuals, have been the subject of any claims in the past ten [10] years involving dishonesty, fraud, financial crime or an offence under laws relating to companies, banking, insolvency, money laundering, insider trading or terrorism financing; e. the financing of the Issuer’s business [including financial statements, if any]; f. whether issuing the Virtual Asset will be the basis for funding any business or other venture; g. how will any proceeds or other consideration [whether monetary or value in kind] received from issuing the Virtual Asset be used; h. who will receive any proceeds or other consideration, what proportion they will receive and how much of that will be directly attributable for the facilitation of the purpose ascribed in Rule I.E.2.g of this VA Issuance Rulebook; i. the risks related to the business and/or activities in relation to which the Virtual Asset will be issued; and j. the governance structure, or quality control plan for the business and/or activities, and the Entities involved.
3. Applicable Rules. On receiving approval by VARA, an Issuer will be required to comply with all Rules or requirements that VARA may impose on the Issuer as a condition and ongoing requirement of any approval. As a minimum standard, Issuers will be required to comply with all Rules in this VA Issuance Rulebook, however, VARA may impose Rules in addition to, or disapply any of, the Rules set out in this VA Issuance Rulebook depending on the considerations which it deems relevant to the nature of the Virtual Asset being issued and/or the Issuer. 4. An Issuer who has obtained approval from VARA under Rule I.E.1 of this VA Issuance Rulebook must re-seek approval from VARA prior to making any material change to any Virtual Asset which it has issued following approval from VARA.
F. Other VA issuances
1. All Entities in the Emirate that carry out any VA issuance, whether or not they are required to obtain a VARA Licence or approval prior to such VA issuance, must comply with all Rules in this VA Issuance Rulebook, including specifically Parts II – IV of this VA Issuance Rulebook at all times. 2. VARA reserves the right, acting in its sole and absolute discretion, to determine that a VA issuance qualifies as a Category 1 or Category 2 VA issuance, regardless of whether all requirements listed in Rule I.C.1 are met, and to impose additional requirements on the Issuer. G. Exempt Entities
1. Exempt Entities may issue Permitted VAs, including selling such Permitted VAs in exchange for fiat currency or other Virtual Assets, without prior approval from VARA, provided that—
a. the consideration received by the Exempt Entity in connection with a VA issuance project does not exceed AED 2,000,000 per project, or the equivalent amount in fiat currency or Virtual Assets; b. the aggregate consideration received by the Exempt Entity in connection with all its VA issuances does not exceed AED 10,000,000, or the equivalent amount in fiat currency or Virtual Assets; c. the Exempt Entity complies with all other Rules in this VA Issuance Rulebook, including Parts II – IV of this VA Issuance Rulebook at all times; d. all transactions for which the Exempt Entity uses an intermediary are handled by Licensed Distributors only; and e. VARA shall, in any event, have the sole and absolute discretion to decide whether an Entity is an Exempt Entity for the purposes of the Regulations and this VA Issuance Rulebook.
2. Compliance requirements. All Virtual Assets issued in accordance with this Rule I.G of this VA Issuance Rulebook shall remain subject to VARA’s supervision, examination and enforcement at all times in accordance with Part V of this VA Issuance Rulebook. H. Revocation of Approval
1. VARA may, in its sole and absolute discretion, revoke an approval if the Entity which has received the approval—
a. has not issued the Virtual Asset within six [6] months after the approval has been granted; b. has obtained the approval by making false or misleading statements including, but not limited to, in the Whitepaper, in providing the information in Rule I.E.2 above or in any other communications with VARA or the public; c. no longer meets, or is in breach of, any of the conditions imposed by VARA in relation to the approval; d. has infringed any Regulation, Rule or Directive; e. has infringed any regulatory requirements applicable in other jurisdictions; f. is Insolvent, subject to Insolvency Proceedings or otherwise has been put under an orderly wind down plan in accordance with applicable insolvency laws; or g. has decided to stop its operations.
2. Entities shall immediately notify VARA of any of the situations referred to in Rule I.H.1 of this VA Issuance Rulebook. 3. In respect of any Virtual Asset which has already been issued or in the process of being issued, VARA may require an Issuer to suspend issuing the Virtual Asset, or issuing further Virtual Assets, if VARA believes a Virtual Asset, how it is being issued or the Issuer does not comply with any aspect of this VA Issuance Rulebook. VARA may also impose additional conditions and/or take further enforcement action within its power including, but not limited to, imposing fines or penalties.