Unilaterally, Fasset, a digital asset exchange platform with a vision to offer affordable and frictionless gateway for people in emerging markets to own and grow their wealth in digital assets has announced  that it has been granted an Initial Approval for a Full Market Product (FMP) license by the Dubai’s Virtual Assets Regulatory Authority (VARA) in UAE.

As per the announcement, “Though the initial approval does not yet allow any virtual asset activity in or from Dubai, this initial stage indicates progress in obtaining full permission to operate in Dubai. This crucial step forward allows Fasset to lead the digital assets market, as one of the first exchanges to provide regulatory protection to consumers in Dubai, as the MENA region has been identified as the world’s fastest growing cryptocurrency market.”

Raafi Hossain, CEO and Co-Founder of Fasset stated, “This is an incredibly exciting time to be leading the way in democratizing access to digital assets. As the world turns to Dubai as the financial epicenter for growth, the opportunity to work with VARA embeds improved access to digital assets with the provision of heavily anticipated regulatory guardrails. We are grateful for the leadership and guidance of VARA team in helping us achieve the milestone of being one of the first exchanges to receive Initial Approval under the FMP license, and look forward to working with the VARA team to achieve full permission to offer our services to the world from Dubai.”

Fasset has sought regulatory permissions across the biggest markets in the Middle East, Asia and Africa, where digital asset-based rails are vital.

Currently Fasset is participating as a sponsor and speaker at the Dubai Fintech Summit. Mohammad Raafi Hossain, participated in a panel discussion on Crypto and the evolving regulatory framework emphasizing the societal value of crypto.

Raafi emphasized that regulation should serve as a positive reinforcement tool for the main benefits of wealth creation and property rights ownership, rather than a reactive response to the negative aspects of the crypto industry. Secondly, he highlighted the need for an international philosophy and ethos around crypto regulation that takes into account the desires and needs of the market with regards to asset ownership and enablement.

Fasset has also signed two MOUs, one with Minted which will provide increased access to tokenized precious metals across developing markets including Turkey, Indonesia and UAE and another one with Oman Mamun which will focus on building innovative new solutions for Oman based on real world assets. The collaboration with Mamun will increase access to investment opportunities and enhance liquidity for physical assets, all within a secure and compliant framework.

As per Dubai VARA website, BitOasis, the crypto broker exchange has moved one step forward in its licensing process. It has become the first among VARA’s crypto broker dealers to receive MVP (Minimum Viable Product). operational license one step before the FMP ( Full Minimum Product) Operational License.  

CoinMENA, Scallops, and MidChains are still in the first stage as MVP provisional while GCEX has received an MVP preparatory license one step before MVP operational license.

BitOasis applied for VARA licensing in March 2022. At the time BitOasis had carried out crypto trades worth $4 billion. Ola Doudin Co-Founder and CEO of BitOasis has stated at the time, “  “We will continue to strive to offer our customers the most customized platform for their local needs in accordance with regulations that will best protect them both now and as the industry evolves.”

In April of 2021, BitOasis announced that it had been granted a a Financial Services Permission (FSP) from the Financial Services Regulatory Authority (FSRA) in the Abu Dhabi Global Market (ADGM) in the United Arab Emirates (UAE), but is still awaiting additional launch approvals as well.

BitOasis has raised a total of $30 million in funding from investors such as Alameda Research, Digital Currency Group, Global Founders Capital, Jump Capital, NXMH, Pantera Capital, Wamda Capital and others.

In October 2022 UAE based crypto exchange BitOasis, and MasterCard launched crypto card programs across the MENA region to facilitate day to day usage of cryptocurrencies at points of sale and ecommerce websites.

On Monday May 1st, Bitoasis in its official announcement and VARA made the following statements,

 Henson Orser, Chief Executive Office, VARA stated “We are pleased to welcome BitOasis to the MVP Programme phase. The VARA ecosystem aims to strike a balance between value creation, risk mitigation and enhanced investment opportunities with consumer protection at its core. BitOasis has demonstrated a strong commitment to operating with a firm bias for regulation throughout the licensing process. One of VARA’s founding principles is creating an equal opportunity regime for responsible VASPs and being able to onboard credible home-grown companies, like BitOasis, in addition to leading global platforms, allowing us to bring the shared learnings of our licensees to build the foundation for our global future economy.”

Ola Doudin, co-founder and CEO of BitOasis added, “We are extremely proud to receive VARA’s MVP Operational License. Becoming the first virtual asset trading platform in the MVP programme to attain an operating license is an important milestone for us and the Emirate of Dubai.”

 Samir Satchu, Senior Vice-President of Public Policy & Expansion at BitOasis noted, “Our commitment and ambition at BitOasis is to serve the GCC and MENA region through a network of regulated platforms and on the ground infrastructure. VARA’s MVP Operational License, as well as our in-principle approval in Bahrain, are important building blocks for that strategy. “

BitOasis is following in the footsteps of HexTrust crypto custodian who also received MVP operational license earlier this year.

VARA and UAE’s Security Commodities Authority both announced the commencement of licensing of already existing and new crypto entities. 

Article was updated on May 1st 2023 with quotes from VARA and BitOasis

In a recent article on Pinsentmasons legal firm website, the article discusses Dubai VARA’s Full market product regulatory regime for virtual assets and its upcoming rollout.

The legal expert Tom Bicknell states, that after VARA’s roll out of its minimum viable product license regime which allowed participants to undertake their activities within an agreed limited scope and specifically to their authorized market segment, VARA will soon be launching its FMP framework which will seek to monitor global trends of the virtual industry and where appropriate issue further rules and guidance

Tom Bicknell of Pinsent Masons states, “Encompassing the learning’s from its MVP licensing stage and widespread industry engagement, VARA’s introduction of the FMP ( Full Market Product) license will serve as a firm footing for the next stage of growth for the UAE’s leading virtual asset industry.”

Once the rollout begins, MVP license holders and other VASPs will have to apply for an FMP license to undertake their activities in the market. The FMP regime is structured around ensuring that anti-money laundering and combating the financing of terrorism (AML/CFT) compliance standards are met in accordance with the Financial Action Taskforce’s recommendations for VASPs. VARA said the FMP regime will also apply ongoing internal controls, corporate governance and conduct of business rules appropriate to the risk profile of the applicant.

Bicknell adds, “VARA is undertaking engagement and consultation with market participants as part of its development of the FMP framework with a version of the framework expected to be released shortly. It is worth noting that VARA has made clear that, notwithstanding the release of the FMP framework, the regulator will seek to monitor global trends of the virtual industry and where appropriate issue further rules and guidance.”

Dubai’s Virtual Asset regulatory Authority (VARA) has issued a statement with regards to FTX exchange. It reiterates that is has revoked the approval of FTX license as well as suspended its MVP License. As per the market notification, while FTX MENA had not commence local operations, VARA will be looking into the impact of FTX on domestic market exposure not limited to FTX MENA

As per the statement, On November 11, 2022, one hundred and thirty-four [134] entities related to, and including, FTX Trading Ltd., FTX Exchange FZE, and Alameda Research [Bahamas] Ltd. [collectively, the “Debtors”] filed a petition in the U.S. Bankruptcy Court for the District of Delaware for relief under Title 11 of the United States Code.

FTX Exchange FZE [FTX MENA], one of the aforementioned entities, had received approval from VARA for a Minimum Viable Product [MVP] licence on 15-Jul-2022 – the Approval was revoked as of 10-Nov-2022 and the Licence stands suspended in consequence.

FTX MENA was in the readiness preparatory phase and had not received VARA approval to commence operations, on board clients or service the market in the MVP Phase of the regulatory regime. Client Money Account with a domestic bank account had also not been secured – which is a pre-requisite for VARA to authorise any VASP operations in the UAE.

As such, the FTX MENA is confirmed to have no client exposure.

Further, in line with VARA’s principles of mitigating market and investor risk, all Virtual Asset Service Providers [VASPs] that have engaged with VARA to participate in Dubai’s regulated ecosystem, have been asked to provide disclosures to determine the severity of domestic market exposure, and contagion scale across the UAE. Details sought include:

·       Exposure to the FTX group of companies referenced in the 11-Nov-2022 bankruptcy filing, including holdings of the FTT token and any other assets

·       Nature and risk of the exposure; alongside the scale/magnitude; and impact/severity and manageability;

·       UAE residents that are impacted, including number of users and magnitude of exposure – both retail and institutional clients [not limited to FTX MENA];

Detailed action plans to mitigate the exposure highlighted above.

Following receipt of the information, VARA will publish a summary closure statement on impact within the VARA Regime. 

VARA also published the following statement, ” The MVP Phase is in its readiness preparatory stage to allow for approved licensees to fulfil all pre-conditions required to undertake MVP market operations within the VARA Regime. As such, no MVP licensees are permitted to provide any regulated services/activities to their specifically authorized market segment(s) until after VARA’s operationalization of the MVP Phase. VARA is following a developing matter involving the potential insolvency, and alleged fraudulent behavior of an affiliate of a Virtual Assets Service Provider (VASP) licensed for participation in the MVP Phase. The situation has been, and will continue to remain closely monitored for latest updates to ensure that timely and substantive actions are taken within the Emirate of Dubai to protect investors and all market participants, backed by active enforcement of regulatory requirements relating to custody and segregation of client money; insurance and liquidity cover; and in general all aspects pertaining to market abuse prevention.”

It is obvious that while FTX MENA had not commenced operations, there were a number of entities and individuals utilizing FTX international platform. This is well noted given that the MENA region was the third biggest revenue generator for FTX not in terms of number of customers but in terms of volume of trades. 

Blockchain.com announced on twitter that it has signed an MOU with Dubai Virtual Assets Regulatory Authority ( VARA)which they say means that soon both retail and institutional clients will be able to access Blockchain.com through Dubai UAE.

The post goes on to add that crypto investors in Dubai and its surrounding regions will soon be able to experience Blockchain.com’s full suite of retail and institutional brokerage tools including custodial services, an exchange, and OTC crypto brokerage services for institutional clients.

Blockchain.com also noted that they are opening a local office and will be hiring in the region. As they stated, “We are also actively pursuing a local Minimum Viable Product license, followed by a full license as soon as it becomes available.”

Already Blockchain.com is licensed in the U.S. and several other European jurisdictions, and is actively pursuing a license in Germany, Netherlands, France, Spain and Ireland. Blockchain.com is valued at $14 billion. 

To date VARA has licensed Binance and FTX with a fully regulated MVP License which is what Blockchain.com is seeking to have. In addition VARA has provided BitOasis, ByBit, CoinMena, CoinMetro, Crypto.com, GCEX, Huobi, MidChains, Rain and OKX with preliminary licenses.

VARA has yet to make an announcement with regards to Blockchain.com

As International crypto exchanges expand their regulatory territory with some hiring, others such as regional crypto exchange RAIN continue to reduce their employee base. RAIN announced a reduction of 20 percent of its workforce in the past weeks.