| 1. | Responsibility. VASPs providing Licensed Distribution Services must ensure beyond all reasonable doubt, the quality of all Issuers and Virtual Assets for which it provides Licensed Distribution Services. |
| 2. | Quality, as referred to in Rule IV.B.1, shall include, but not be limited to all factors relevant to assurance of the following—
| a. | consumer protection and preventing harms arising from misinformation and/or abusive practices, ensuring consumers are appropriately informed and have provided consent prior to engaging with risk; | | b. | full FATF and financial sanctions compliance, and zero tolerance of money laundering, financing of terrorism or destructive proliferation activities; | | c. | zero tolerance of any fraud, theft or other illicit or criminal activity; | | d. | fair, orderly and transparent markets, including full compliance with VARA's Market Offences as defined in the Regulations; | | e. | technical and/or cyber security exposures associated with the Virtual Asset and/or with the act of issuance or throughout the process of issuing or transferring the Virtual Asset; | | f. | compliance with all applicable laws and regulations; and | | g. | compliance with the VA Issuance Rulebook.
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| 3. | Due diligence and assessment of Virtual Assets. VASPs providing Licensed Distribution Services shall carry out comprehensive due diligence on each Virtual Asset for which it provides Licensed Distribution Services, in order to ensure the quality of such Virtual Asset, in compliance with Rule IV.B.1. Such due diligence shall include, but not be limited to, the following—
| a. | that the Virtual Asset complies with the VASP's VA Standards; | | b. | that the Whitepaper complies with Part III.B of the VA Issuance Rulebook; | | c. | that the Risk Disclosure Statement complies with Part III.C of the VA Issuance Rulebook; | | d. | compliance with Part IV of the Market Conduct Rulebook in regard to investor classifications; and | | e. | all smart contracts used for the purposes of the Virtual Asset have undergone comprehensive audits of their effectiveness, enforceability and robustness and that all findings from such audits have been satisfactorily remediated.
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| 4. | Due diligence and assessment of Issuer. VASPs providing Licensed Distribution Services shall carry out comprehensive due diligence on all Issuers to whom they provide Licensed Distribution Services to ensure the quality of the Issuer, in compliance with Rule IV.B.1. Such due diligence shall include, but not be limited to, the following—
| a. | that the Issuer complies with Part II of the VA Issuance Rulebook; and | | b. | the VASP meets its requirements under Part III.E – Client due diligence of the Compliance and Risk Management Rulebook.
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| 5. | Disclaimer. VASPs must ensure that all documentation, including all Whitepapers, relating to Virtual Assets for which it provides Licensed Distribution Services contains the following disclaimer:
| a. | ‘VARA has not made any representation and does not provide any warranties regarding any Issuer or Virtual Asset including, but not limited to, their fitness for purpose, suitability or regulatory status in any jurisdiction other than the Emirate of Dubai, UAE.'
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