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  • Part VII – Sponsored VASPs

    • A. Interpretation

      1.“Regulated Sponsor” means a VASP which is approved by VARA to sponsor other Entities to carry out one or more VA Activities in the Emirate, in accordance with this Part VII of the Compliance and Risk Management Rulebook.
      2.“Sponsored VASP” means an Entity which is sponsored by a Regulated Sponsor to carry out one or more VA Activities in the Emirate, in accordance with this Part VII of the Compliance and Risk Management Rulebook.
       

    • B. Requirement to Obtain Prior Approval

      1.No VASP may act as a Regulated Sponsor without approval from VARA in accordance with Rule VII.C of this Part VII of the Compliance and Risk Management Rulebook, below.
      2.For the avoidance of doubt, nothing in this Part VII of the Compliance and Risk Management Rulebook shall have any effect on a VASP’s obligations to comply with all other requirements in the Regulations, Marketing Regulations, Rulebooks, Directives and/or their Licence in respect of the VA Activities for which it is otherwise Licensed to carry out.
       

    • C. Application Process

      1.VASPs shall adhere to the application process as prescribed by VARA from time to time, when applying for approval to be a Regulated Sponsor pursuant to this Part VII of the Compliance and Risk Management Rulebook.
      2.
      All applications for approval shall, at a minimum, consist of the following—
       
      a.demonstration of the Regulated Sponsor’s ability to comply with this Part VII of the Compliance and Risk Management Rulebook; and
      b.demonstration of the Regulated Sponsor’s ability to ensure all Sponsored VASPs comply with all Regulations, Marketing Regulations, Rules and Directives applicable to the VA Activities which the Sponsored VASPs will carry out, and on an ongoing basis, as may be amended from time to time.
       

    • D. Establishing a Sponsored VASP Relationship

      1.
      In order to establish a Sponsored VASP relationship, a Regulated Sponsor must—
       
      a.be the Controlling Entity of, or have the same Controlling Entity as, the Sponsored VASP;
      b.
      have a written agreement with each Sponsored VASP, which shall include—
       
      i.what business and/or VA Activities the Sponsored VASP can carry out;
      ii.apportioning liability for compliance in areas not prescribed by VARA;
      iii.state clearly when and how the agreement can be terminated;
      iv.provide the Regulated Sponsor with rights of audit over the Sponsored VASP; and
      v.require the Sponsored VASP to report regularly to the Regulated Sponsor on the Sponsored VASP's compliance with its obligations under this Compliance and Risk Management Rulebook;
       
      c.conduct detailed due diligence and assess each Sponsored VASP before sponsoring them, to ensure they're fit and proper, financially stable and suitable to carry out their proposed VA Activities;
      d.ensure that establishing such relationship does not contravene Federal Competition Laws; and
      e.obtain approval from VARA, through the process prescribed by VARA from time to time, prior to the Sponsored VASP commencing any VA Activities in the Emirate under the Sponsored VASP relationship.
       
      2.Legal entity in the Emirate. Regulated Sponsors shall ensure that each Sponsored VASP is and remains a legal entity, in one of the legal forms approved by a commercial licensing authority, in the Emirate.
      3.VARA reserves the right to refuse, suspend or revoke approval of any Sponsored VASP relationship on any grounds, including but not limited to, where VARA deems, in its sole and absolute discretion, that such relationship may create an anti-competitive or monopolistic position or otherwise threaten the integrity and/or stability of the Virtual Assets market in the Emirate.
       

    • E. Regulatory Status, Marketing and Disclosures

      1.Regulatory status. Notwithstanding Rule VII.E.2.c of this Compliance and Risk Management Rulebook, for the purposes of Regulation III.A.1.a of the Regulations, all Sponsored VASPs established and maintained in accordance with this Part VII of the Compliance and Risk Management Rulebook, shall be deemed as authorised and Licensed by VARA for the VA Activities which the application for approval under Rule VII.D of this Compliance and Risk Management Rulebook relates and as approved by VARA under Rule VII.D.1.e.
      2.
      Marketing. In all Marketing, Regulated Sponsors shall ensure that Sponsored VASPs—
       
      a.comply with the Marketing Regulations;
      b.include the name and Licence number of the Regulated Sponsor; and
      c.clearly indicate that they are a Sponsored VASP, and not a VARA Licensed VASP.
       
      3.
      Public disclosures and risk disclosure statement. In addition to all other requirements regarding disclosures required under the Regulations, Marketing Regulations, Rules or Directives, Regulated Sponsors shall ensure that all Sponsored VASPs provide the following information in an easily accessible location, in a machine-readable format, and that it is kept accurate and up-to-date at all times—
       
      a.the name of their Regulated Sponsor and the Licence number issued to the Regulated Sponsor by VARA;
      b.the authorisation number issued to the Sponsored VASP by VARA;
      c.all VA Activities they are authorised by VARA to carry out in the Emirate, including any restrictions stated by VARA as a condition of their authorisation, and the validity period of such authorisation; and
      d.the name of the Sponsored VASP's Responsible Officer appointed in accordance with Rule VII.G below.
       

    • F. Compliance Responsibility

      1.Regulated Sponsors shall ensure, and be responsible for, the ongoing compliance with all applicable Regulations, Marketing Regulations, Rules and Directives by their Sponsored VASPs, at all times.
      2.Regulated Sponsors shall ensure that they have sufficient resource, knowledge and expertise to comply with their obligations in this Part VII of the Compliance and Risk Management Rulebook, at all times, in respect of each Sponsored VASP and all Sponsored VASP relationships in total.
      3.
      Regulated Sponsors shall, at all times, ensure and be responsible for their Sponsored VASPs' compliance with the following compulsory Rulebooks as may be updated from time to time—
       
      a.Company Rulebook;
      b.Compliance and Risk Management Rulebook;
      c.Technology and Information Rulebook; and
      d.Market Conduct Rulebook.
       
      4.
      Regulated Sponsors shall, at all times, ensure and be responsible for their Sponsored VASPs' compliance with all relevant Rulebooks that correspond to the VA Activities the Sponsored VASP is authorised by VARA to carry out, as may be amended from time to time—
       
      a.Advisory Services Rulebook;
      b.Broker-Dealer Services Rulebook;
      c.Custody Services Rulebook;
      d.Exchange Services Rulebook;
      e.Lending and Borrowing Services Rulebook;
      f.VA Management and Investment Services Rulebook; and
      g.VA Transfer and Settlement Services Rulebook.
       
      5.Data protection and segregation. In addition to all Rules in Part II of the Technology and Information Rulebook, Regulated Sponsors must ensure that Personal Data collected by each Sponsored VASP remains segregated from that of the Regulated Sponsor, and each of the Regulated Sponsor's other Sponsored VASPs.
       

    • G. Responsible Officer

      1.Regulated Sponsors must ensure their Sponsored VASPs each appoint one (1) individual of sufficient seniority who shall be responsible for the Sponsored VASP’s compliance with all legal and regulatory obligations (“Responsible Officer”).
      2.
      The Responsible Officer must be—
       
      a.a full-time employee of the Sponsored VASP;
      b.notified to, and approved by, VARA during the application process in Rule VII.D of this Compliance and Risk Management Rulebook; and
      c.meet all other requirements in Rule I.C.2 of the Company Rulebook, as may be amended from time to time.
       
      3.Regulated Sponsors must ensure that the Responsible Officer continues to meet the requirements in Rule VII.G.2 of this Compliance and Risk Management Rulebook at all times, and shall validate and maintain a record of such validation on an annual basis.
      4.Regulated Sponsors must notify and seek approval from VARA prior to changing the Responsible Officer of any Sponsored VASP, except in the event of reasonably unforeseen circumstances. In such instances, the Regulated Sponsor must notify VARA immediately and provide information on how it will continue to meet the requirements with regard to the Responsible Officer of the Sponsored VASP.
       

    • H. Capital and Prudential Requirements

      1.In addition to all existing obligations in respect of the VA Activities for which it is Licensed, Regulated Sponsors shall comply with Part VI Capital and Prudential Requirements of the Company Rulebook for each Sponsored VASP with whom it has a Sponsored VASP relationship.
       

    • I. Accounts

      1.
      Subject to compliance with Rule VII.I.2 of this Compliance and Risk Management Rulebook below, Regulated Sponsors may establish each of the following accounts in their own name on behalf of each Sponsored VASP—
       
      a.Client Money Accounts required in Part IV of this Compliance and Risk Management Rulebook;
      b.business and/or operating accounts of the Sponsored VASP; and
      c.an account maintaining Paid-Up Capital in accordance with Rule VI.B.3 of the Company Rulebook.
       
      2.
      Regulated Sponsors must ensure, and are responsible for ensuring, that each of the accounts listed in Rule VII.I.1 of this Compliance and Risk Management Rulebook above comply with the following—
       
      a.a separate account is established for each Sponsored VASP with whom it has a Sponsored VASP relationship, and no account is shared either between the Regulated Sponsor and a Sponsored VASP, or between more than one Sponsored VASP;
      b.the name of the Sponsored VASP is included in the title of each account; and
      c.the Regulated Sponsor maintains segregation between all the accounts of each Sponsored VASP, with whom it has a Sponsored VASP relationship, in all books and records.
       

    • J. Complaints Handling Requirements

      1.Regulated Sponsors must ensure, and are responsible for ensuring, compliance with Part III of the Market Conduct Rulebook for each Sponsored VASP with whom it has a Sponsored VASP relationship. 
      2.Regulated Sponsors must establish, or ensure each Sponsored VASP establishes, a separate Complaints handling procedure required in Part III.B of the Market Conduct Rulebook for each Sponsored VASP with whom it has a Sponsored VASP relationship.
       

    • K. Governance and Reporting Responsibilities

      1.
      Governance. Regulated Sponsors must—
       
      a.review and maintain oversight of each Sponsored VASP's activities, business and senior management;
      b.monitor and actively manage each Sponsored VASP's performance of its obligations under the written agreement between the Sponsored VASP and the Regulated Sponsor, as required under Rule VII.D.1.b of this Compliance and Risk Management Rulebook;
      c.ensure that they have the skills and resources to oversee all Sponsored VASPs at all times, including if a Sponsored VASP’s business changes and/or expands;
      d.ensure that each Sponsored VASP continues to meet the necessary standards as required by VARA in respect of the VA Activities carried out by the Sponsored VASP; and
      e.have adequate financial resources taking into account all business and/or VA Activities of all Sponsored VASPs.
       
      2.
      Reporting. In addition to all reporting requirements in the other Rulebooks, Regulated Sponsors must provide VARA with the following information, in respect of each Sponsored VASP, on an annual basis—
       
      a.complaints data;
      b.full audited accounts; and
      c.all other data as required by VARA from time to time.