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  • Annex 2: Asset-Referenced Virtual Assets Issuance Rules

    • Part I – Approval Requirements

      • A. Interpretation

        1.“Asset-Referenced Virtual Assets” or “ARVAs” has the meaning ascribed to it in Schedule 2 – Definitions of the VA Issuance Rulebook.
        2.“Income” has the meaning ascribed to it in Schedule 2 – Definitions of the VA Issuance Rulebook.
        3.“Reference Assets” means, in relation to an ARVA, the RWA and/or Income the ARVA represents or purports to represent, as approved by VARA.
        4.“Reserve Assets” means, for the purposes of these ARVA Rules, the asset or assets maintained in accordance with Rule III.C of these ARVA Rules and as approved by VARA. Reserve Assets are not Client Money or Client VAs, as defined in the Compliance and Risk Management Rulebook.
        5.“RWA” has the meaning ascribed to it in Schedule 2 – Definitions of the VA Issuance Rulebook.
         

      • B. General Requirements for VARA Approval

        1.As stated in Rule I.C.1 of the VA Issuance Rulebook, the issuance of an ARVA is a Category 1 VA Issuance and as such is a VA Activity. In addition to compliance with these ARVA Rules, and all other Regulations, Rules and Directives as communicated by VARA in its Licence or otherwise from time to time, all Entities in the Emirate seeking to issue an ARVA will be required to comply with the following Rulebooks—
         
         a.Company Rulebook;
         b.Compliance and Risk Management Rulebook;
         c.Technology and Information Rulebook;
         d.Market Conduct Rulebook; and
         e.VA Issuance Rulebook.
         
        2.Approval of each ARVA. All VASPs Licensed by VARA to carry out Category 1 VA Issuance must obtain approval from VARA prior to issuing each ARVA.
        3.Approval conditions. VARA may, in its sole and absolute discretion, impose conditions on any approvals granted for the issuance of an ARVA by a VASP, including, but not limited to—
         
         a.segregation of the VASP's business or operations in relation to VA issuances and any other VA Activities (or other businesses and activities, if applicable) by implementing and strictly enforcing policies and procedures;
         b.obtaining and maintaining all necessary regulatory approvals and licences for activities involving the RWA and/or Reserve Assets, which must be carried out for the normal functioning of the ARVA, or otherwise provide further information to demonstrate ongoing compliance with all applicable laws and regulations;
         c.provision of further information to demonstrate the VASP's ability to comply with any Regulation, Rule or Directive; and/or
         d.any additions or modifications to requirements set out in any Regulation, Rule and/or Directive.
         
        4.Applicable Rules. On receiving approval to issue an ARVA by VARA, a VASP will be required to comply with all Rules or requirements that VARA may impose on the VASP as a condition and ongoing requirement for any approval. VARA may impose Rules in addition to, or disapply any of, the Rules in these ARVA Rules depending on the considerations which it deems relevant to the nature of the ARVA being issued and/or the VASP. Any additional Rules imposed on a VASP may be requirements equivalent or similar to those contained in the Regulations, Rulebooks or Directives.
         

      • C. Significant ARVA Issuers

        1.VARA may, in its sole and absolute discretion, designate any VASP Licensed to issue an ARVA as a Significant ARVA Issuer at the time of granting a Licence or anytime thereafter.
        2.In designating a VASP as a Significant ARVA Issuer, VARA may consider all factors relevant to the VASP and/or the ARVA issued by the VASP, including but not limited to—
         
         a.the number of owners and/or holders of the ARVA;
         b.the value of circulating and/or outstanding supply of the ARVA;
         c.the value of the Reserve Assets maintained by the VASP;
         d.the number and value of transactions in the ARVA;
         e.whether the VASP and/or its affiliates carry out any other VA Activity(ies) and/or financial services in the Emirate, or provide services similar to VA Activities and/or financial services in other jurisdictions;
         f.interconnectedness with licensed financial institutions and/or VASPs; and/or
         g.the business, structural and operational complexity of the VASP in relation to the ARVA issued by it.
         
        3.VARA may, in its sole and absolute discretion, impose any Rules on a Significant ARVA Issuer in addition to those contained in the Rulebooks, which may include, but not be limited to, additional Rules on—
         
         a.company structure and corporate governance;
         b.Paid-Up Capital, Net Liquid Assets, Insurance and/or Reserve Assets;
         c.audits, regulatory reporting and regulatory notifications; and/or
         d.any other matter as VARA deems appropriate.
         

    • Part II – Additional Disclosures

      • A. Additional Whitepaper Disclosures

        1.
        In addition to all other disclosures required in the Part III of the VA Issuance Rulebook, VASPs Licensed to issue ARVAs must include the following in the Whitepaper—
         
        a.a clear and accurate description of the rights and/or value that the ARVA grants, or purports to grant, owners and/or holders of the ARVA and a clear and detailed policy on how the VASP ensures the ARVA derives and maintains its value;
        b.the types and composition of Reference Assets, and criteria for how such Reference Assets were identified;
        c.whether the types of Reference Asset will change and, if so, the circumstances in which any such changes may take place;
        d.whether the ARVA represents, or purports to represent, a direct right of ownership of the Reference Assets, or a fractional proportion thereof, and if so, a detailed description of how the right of ownership is established and/or such fractionalisation is structured;
        e.if transactions in the Reference Assets are subject to legal or regulatory requirements relating to their settlement and/or transfer of title, a detailed description of how such requirements will be met and an explanation of how the VASP will respond to transactions in the ARVA not resulting in corresponding transactions in the Reference Asset being legally settled, completed and/or transferred, and any mitigation employed by the VASP to address such risks;
        f.whether the ARVA maintains, or purports to maintain, a stable reference to the value of the Reference Assets, and if so, a detailed description of how such stable reference is maintained and the weighting of each type of Reference Asset in the unit value of the ARVA;
        g.whether the VASP will maintain Reserve Assets in respect of the ARVA;
        h.the types and composition of Reserve Assets (if applicable), and criteria for how such Reserve Assets were identified;
        i.whether the types of Reserve Asset may be subject to change and, if so, the circumstances in which any such changes may take place, including a detailed description of the VASP’s investment policy for the Reserve Assets (if applicable);
        j.a clear and detailed policy on the procedure for the creation and destruction of the ARVAs in public circulation and the consequence of such creation or destruction on the increase and decrease of the Reserve Assets (if applicable);
        k.full details of the rights of owners and/or holders of the ARVA to redeem the value of the ARVA, including but not limited to the requirements under Rule III.E and the procedures and timeline for owners and/or holders of the ARVA to redeem such value;
        l.the custody arrangement of the Reference Asset and/or Reserve Assets, including but not limited to, the custodians involved and how the VASP ensures it has timely access to Reserve Assets to process redemption requests;
        m.detailed assessments of risks relevant to the management, custody, investment and/or liquidation of the Reference Asset and/or Reserve Assets, including but not limited to, credit risk, market risk, counterparty risk and liquidity risk, and policies and procedures to manage such risks for the purpose of processing redemption requests; and
        n.any other relevant information as may be determined by VARA.
         

      • B. Additional Ongoing Disclosures

        1.
        VASPs Licensed to issue ARVAs shall at least monthly, and in a clear, accurate and transparent manner disclose on their website—
         
        a.the number and value of ARVAs in public circulation; and
        b.the value and composition of the Reserve Assets (if applicable).
         
        2.Disclosures in accordance with Rule III.B shall be accompanied by a statement confirming whether or not the ARVA is, at the time of the disclosure, fully backed by sufficient Reserve Assets in accordance with Rule III.C.1.
         

    • Part III – Additional Compliance Obligations of ARVA Issuers

      • A. Value of an Asset-Referenced Virtual Asset

        1.
        All Entities seeking to issue an ARVA shall clearly demonstrate to VARA—
         
        a.the rights and/or value that the ARVA grants, or purports to grant, to the owners and/or holders of the ARVA; and
        b.a clear and detailed policy on how the Entity will ensure the ARVA derives and maintains its value.
         
        2.Reference Asset. All Entities seeking to issue an ARVA shall clearly demonstrate to VARA the type and composition of Reference Assets and whether the Reference Asset may change and, if so, the circumstances in which any such changes may take place.
         

      • B. Direct Right of Ownership

        1.
        All VASPs Licensed to issue an ARVA which represents, or purports to represent, a direct right of ownership of the Reference Asset, or a fractional proportion thereof, shall ensure—
         
        a.the right of ownership is legally and validly established and that such right of ownership is transferred in the event of a transfer of ownership of the ARVA;
        b.where transactions in the Reference Assets are subject to legal or regulatory requirements relating to their settlement, completion and/or transfer of title, that such legal or regulatory requirements are satisfied, in order to give effect to the transfer of ownership in the event of a transfer of ownership of the ARVA; and
        c.that the VASP will respond to transactions in the ARVA not resulting in a corresponding transaction in the Reference Asset being legally settled, completed and/or transferred, and shall implement mitigating measures to ensure all transactions in the ARVA result in a corresponding transaction in the Reference Asset being legally settled, completed and/or transferred.
         
        2.Legal opinion. VASPs Licensed to issue ARVAs may be required to provide VARA with a legal opinion, provided by a professional and duly registered lawyer, confirming any explanation made either to VARA or any information contained in a Whitepaper.
         

      • C. Reserve Assets

        1.
        VASPs Licensed to issue ARVAs which purport to maintain a stable value in respect of any Referenced Asset, shall hold and maintain sufficient and acceptable Reserve Assets such that—
         
        a.the risks associated with the rights and/or to the value that the ARVA grants, or purports to grant, owners of the ARVA are secured; and
        b.the liquidity risks associated with any rights of redemption granted to the owners and/or holders are mitigated and managed.
         
        2.
        VASPs Licensed to issue ARVAs shall, at all times, manage Reserve Assets effectively and prudently, at least by—
         
        a.maintaining Reserve Assets only with custodians or other Entities which are validly licensed and qualified to hold such assets;
        b.ensuring Reserve Assets are segregated from the VASP’s own funds;
        c.ensuring newly added Reserve Assets are held in custody in accordance with Rule III.C.2.a by no later than the time period stipulated by VARA as a condition of its approval of the VASP to issue the ARVA;
        d.having in place policies and procedures to ensure Reserve Assets can be promptly accessed to process and complete any redemption requests in accordance with Rule III.E, including but not limited to conversion into AED where the redemptions are being paid in AED; and
        e.conducting regular risk assessments to evaluate the appropriateness of the composition of Reserve Assets in ensuring compliance with this Rule III.C .
         
        3.
        VASPs Licensed to issue ARVAs shall, to the furthest extent permitted by applicable laws, ensure that Reserve Assets—
         
        a.are legally segregated from its estate and the Reserve Assets of any other Virtual Assets;
        b.are not rehypothecated, or subject to any pledges or encumbrances which would prevent the Issuer from processing any redemption request in accordance with Rule III.E; and
        c.will not otherwise be subject to any recourse by the creditors of the VASP, the custodian of the Reserve Assets or any other third parties, in particular, in the event of any party becoming Insolvent.
         
        4.Legal opinion. VASPs Licensed to issue ARVAs shall be required to provide VARA with a legal opinion, provided by a duly registered practising lawyer, confirming compliance with Rule III.C.3 above.
        5.Conflicts of interest. VASPs Licensed to issue ARVAs shall take all appropriate steps to prevent, identify, manage and publicly disclose conflicts of interest arising from the constitution and management of Reserve Assets.
         

      • D. Audits and Reporting

        1.For the purposes of complying with this Rule III.D, VASPs Licensed to issue ARVAs shall appoint an independent third-party auditor and promptly notify VARA of the full name and contact details of the auditor upon appointment.
        2.
        VASPs Licensed to issue ARVAs shall—
         
        a.
        every six (6) months, commission an independent audit of—
         
        a.the number and value of the ARVAs in public circulation;
        b.the composition and value of the Reserve Assets, if applicable; and
         
        b.commission an independent audit of their financial statements to produce an annual report, which shall be promptly made available to VARA upon request.
         
        3.The Senior Management of the VASP Licensed to issue ARVAs shall, as soon as practicable upon its completion, submit to VARA an attestation as to the accuracy of each independent audit in accordance with Rule III.D of these ARVA Rules.
         

      • E. Redemptions

        1.
        To the extent an ARVA provides owners and/or holders with a right of redemption, the VASP Licensed to issue the ARVA shall, at all times, ensure owners and/or holders of the ARVA have the right to redeem the ARVA for an equal value denominated in—
         
        a.AED; and
        b.other forms as may be determined by the VASP and disclosed in the Whitepaper.
         
        2.
        To the extent an ARVA provides owners and/or holders with a right of redemption, the VASP Licensed to issue the ARVA shall, at all times, ensure owners and/or holders of the ARVA have the right to redeem the ARVA—
         
        a.against the VASP; or
        b.otherwise in respect of the Reserve Assets in the event that the VASP is unable to process and complete redemption requests.
         
        3.VASPs Licensed to issue ARVAs must ensure all requests made by owners and/or holders to redeem such ARVAs for an equal value of RWAs shall be processed and completed within a reasonable period of such requests being made, provided the owner and/or holder, or their designee, has successfully onboarded with the VASP and any other conditions necessary to permit redemption in compliance with all applicable laws, Regulations, Rules and Directives have been met.
        4.VASPs Licensed to issue ARVAs shall process and complete redemption requests without charging any fees.
        5.VASPs Licensed to issue ARVAs shall establish, maintain and implement clear and detailed policies and procedures to ensure compliance with this Rule III.E.
         

      • F. Marketing

        1.
        No Entity may, in the Marketing of any Virtual Asset in the Emirate, use the term ‘stablecoin’ or include language suggesting that the value of a Virtual Asset is maintained stable relative to a particular RWA, unless—
         
        a.it is a VASP Licensed by VARA to issue ARVAs and has received VARA’s approval to issue the ARVA and such approval has not been revoked;
        b.such ARVA purports to maintain a stable reference to the value of one RWA only; and
        c.the VASP maintains Reserve Assets in accordance with Rule III.C of these ARVA Rules.
         
        2.VASPs Licensed to issue ARVAs shall, in all Marketing relating to any ARVA, include clear and unambiguous statements that such ARVA is not covered by any investor protection or deposit guarantee schemes.
         

      • G. Capital Requirements

        1.
        VASPs Licensed to issue ARVAs shall always maintain Paid-Up Capital equal to the value of at least the higher of—
         
        a.AED 1,500,000; and
        b.2% of the average market value of the Reserve Assets (where applicable) calculated over the preceding twenty-four (24) months.
         

    • Schedule 2 – Definitions

      TermDefinition
      “Asset-Referenced Virtual Asset” or “ARVA”has the meaning ascribed to it in Schedule 2 – Definitions of the VA Issuance Rulebook.
      “ARVA Rules”means these Asset-Referenced Virtual Assets Issuance Rules issued by VARA pursuant to the Regulations, as may be amended from time to time.
      “Category 1 VA Issuance”has the meaning ascribed to it in the VA Issuance Rulebook.
      “Client Money”has the meaning ascribed to it in the Compliance and Risk Management Rulebook.
      “Client VA”has the meaning ascribed to it in the Compliance and Risk Management Rulebook.
      “Directive”has the meaning ascribed to it in the Regulations.
      “Dubai VA Law”means Dubai Law No. (4) of 2022 Regulating Virtual Assets in the Emirate of Dubai, as may be amended from time to time.
      “Emirate”means all zones across the Emirate of Dubai, including Special Development Zones and Free Zones but excluding the Dubai International Financial Centre.
      “Entity”means any legal entity or individual.
      “Insolvency Proceedings”has the meaning ascribed to it in the Regulations.
      “Insolvent”has the meaning ascribed to it in the Regulations.
      “Issuer”means the Entity responsible for the issuance of a Virtual Asset.
      “Marketing”has the meaning ascribed to it in the Marketing Regulations.
      “Marketing Regulations”means the Regulations on the Marketing of Virtual Assets and Related Activities 2024, issued by VARA and as may be amended or superseded from time to time.
      “Regulations”means the Virtual Assets and Related Activities Regulations 2023, as may be amended from time to time.
      “Reference Assets”has the meaning ascribed to it in Rule III.A.3 of these ARVA Rules.
      “Reserve Assets”has the meaning ascribed to it in Rule III.A.4. of these ARVA Rules.
      “Senior Management”means the executive management of an Entity responsible and accountable to the Board for the sound and prudent day-to-day management of the Entity, generally including but not limited to, the chief executive officer, chief financial officer, chief risk officer, and heads of the compliance and internal audit functions, or as equivalent roles may be titled.
      “Significant ARVA Issuer”means a VASP designated by VARA in accordance with Rule III.C.1 of these ARVA Rules.
      “VA Issuance Rulebook”means the Virtual Asset Issuance Rulebook issued by VARA pursuant to the Regulations, as may be amended or supplemented by VARA from time to time.
      “VARA”means the Dubai Virtual Assets Regulatory Authority.
      “Virtual Asset” or “VA”has the meaning ascribed to it in the Dubai VA Law.
      “Whitepaper”has the meaning ascribed to it in Rule III.A,1 of the VA Issuance Rulebook.