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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.