Dubai VARA circular defines who is a qualified investor
Dubai’s Virtual Asset Regulatory Authority recently issued a circular noting how VASPs could onboard and classify institutional investors or qualifies investors, noting that qualified investors were those who held maintained assets worth $950,000 excluding residence or made an annual income of $190,000.
This Circular provides guidance to all Virtual Asset Service Providers (VASPs) operating in the Emirate of
Dubai (Mainland and Free Zones) on the process for onboarding and investor classification (Retail,
Qualified Investors, and Institutional Clients), in accordance with the requirements set forth under the
Virtual Assets Regulatory Authority (VARA) Rulebooks.
VARA noted that the reason for the circular was to ensure consistent implementation of investors classification across all licensed entities. As it noted, ” VASPs shall only conduct any Virtual Asset Activity
with clients classified under one of the categories permitted by VARA: Retail, Qualified, or Institutional
Investors.
A Qualified Investor may be those who maintain net assets of at least AED 3,500,000 ($950K) (excluding primary residence and related liabilities) and/or an annual income of AED 700,000 $190K or more. It also could be a legal entity maintaining net assets of at least AED 3,500,000, with directors possessing relevant Virtual Asset knowledge.
Clients meeting these thresholds is allowed to be given the option to be classified as either a Retail or a
Qualified Investor.
VASPs need to make these assessments during onboarding by requesting details of income and net assets to determine financial eligibility, which allows qualified investor access to a broader range of services including high risk products offered by the VASP. All sources of wealth need to be verified including compliance.
But VARA does not only care about the financial situation of the investors, but also about their knowledge and understanding of virtual assets. VASPs must also conduct a suitability assessment to ensure the client possesses this knowledge and has experience with virtual assets. They also need to assess that the investors have clearly defined investment objectives and demonstrate sufficient capacity to bear sudden or significant losses.
VARA notes that if a client fails the assessment they need to have a cool off period of at least one week before reassessing.
In terms of upgrading clients from retail to qualified investors VASPs are required to have a process, and update information to their client’s financial status.
VARA calls on all VASPs to review and align their onboarding mechanisms for qualified investor immediately and it might ask for evidence of compliance at any time. Failure to comply with these requirements may result in regulatory action under the Virtual Assets and Related Activities Regulations and relevant Rulebooks.
VARA has been striving to ensure that the regulatory compliant within its ecosystem is well defined. In October 2025, it penalized 19 VASPs for carrying out unlicensed virtual asset activities and for breaches of VARA’s marketing regulations. The penalties ranged from AED 100,000 – AED 600,000 ( $27,000, to $163,000) depending on the seriousness of the violation.
