Guide to VARA Transfer and Settlement Services Licenses
Article Summary
- Transfer and settlement are regulated market infrastructure under VARA. If your business facilitates the movement of virtual assets between counterparties or completes settlement following a trade, you may fall within VARA’s Transfer and Settlement Services licensing perimeter.
- This license covers the “delivery layer” of the crypto market. It applies to infrastructure that ensures virtual assets are actually transferred, delivered, and settled after a transaction has been agreed.
- Typical regulated models include infrastructure that manages the movement and completion of virtual asset transactions between parties. This may involve settlement engines, transfer systems, or coordination mechanisms that ensure transactions are properly cleared and delivered. Platforms that facilitate the movement of tokens between wallets, handle the settlement of trades after execution, or operate systems that record the final transfer of ownership on-chain may therefore fall within the scope of this licensing requirement.
- Pure technology providers may fall outside scope. Developers building wallets, APIs, or blockchain infrastructure without facilitating transfers between counterparties are generally not performing regulated transfer and settlement activity.
- The regulatory question is control over the transfer. Once a firm becomes responsible for ensuring assets are transferred or settled between parties “by way of business”, the activity typically enters VARA’s regulatory perimeter.
- Carrying on regulated virtual asset activity without the appropriate VARA permission creates meaningful regulatory exposure. Where a firm provides in-scope services in Dubai without being licensed, it may face administrative sanctions, supervisory intervention, and reputational damage.
- The authorisation pathway is typically structured in two stages. Applicants first submit an Initial Disclosure Questionnaire (IDQ) and, if VARA is satisfied at that stage, receive initial approval. The firm must then complete the more detailed phase of the application, which usually covers its governance framework, compliance arrangements, operating model, and technology environment.
- VARA also places significant emphasis on operational resilience. Firms providing transfer and settlement services are expected to maintain robust controls over transaction accuracy, reconciliation processes, wallet and key-security arrangements, cybersecurity governance, and the overall reliability of the systems on which the service depends.
Dubai has placed itself at the centre of the global virtual-asset conversation by establishing a dedicated regulator: the Virtual Assets Regulatory Authority (VARA). While most firms initially focus on exchanges, broker-dealers, and custodians, VARA’s framework also captures businesses responsible for the movement and final settlement of virtual assets between parties.
If a firm intends to facilitate the transfer of virtual assets between wallets, settle transactions following trades executed on a platform, or operate infrastructure that ensures the delivery and final settlement of virtual assets between counterparties, that firm may require a VARA Transfer and Settlement Services license. This is not a peripheral permission. Where a firm moves beyond supplying purely technical tools and takes on responsibility for the actual transfer, delivery, or settlement of virtual asset transactions between counterparties, the activity is likely to fall within VARA’s regulatory scope. Conducting that activity without the required licence can expose the business to regulatory penalties, reputational damage, and broader legal or commercial risk under Dubai’s virtual assets framework.
In this article, we examine VARA’s Transfer and Settlement Services licence, including the types of activity that typically fall within scope, the infrastructure models commonly captured by the regime, the applicable capital and insurance requirements, and the principal licensing and ongoing compliance considerations.
What is a VARA Transfer and Settlement Services license?
A VARA Transfer and Settlement Services license authorises an entity to facilitate the transfer, clearing, and settlement of virtual asset transactions between counterparties. In practice, this captures infrastructure providers that move virtual assets between wallets, settle obligations arising from trades executed on a platform, or operate systems that finalise transactions and record the change of ownership on-chain or within a controlled settlement environment.
This activity sits at a critical point in the virtual asset market structure. Once a trade has been executed, the integrity of the market depends on the reliable transfer of assets and the final settlement of obligations between parties. Failures at this layer; whether operational, technological, or governance-related; can lead to failed settlements, liquidity disruptions, counterparty risk, or broader market instability.
VARA’s regulatory approach therefore treats transfer and settlement as part of the core market infrastructure rather than a purely technical function. Firms operating in this space are expected to maintain robust operational resilience, transaction integrity controls, and transparent settlement processes. In a market built on distributed ledger technology and high-velocity trading, the reliability of the transfer and settlement layer is what ultimately converts a matched trade into a completed and effective transaction.
What is VARA?
The Virtual Assets Regulatory Authority (VARA), established in early 2022, represents a pioneering initiative by the Dubai government to regulate the fast-growing sector of virtual assets.
VARA is the first regulatory body of its kind dedicated to ensuring the secure and effective functioning of Virtual Asset Service Providers (VASPs) in Dubai. This initiative positions Dubai and the UAE as a prominent centre for digital finance and innovation.
What are VARA’s objectives?
VARA’s primary objectives include promoting Dubai as a regional and international centre for virtual assets, enhancing the competitive edge of the Emirate in this domain, and fostering a robust digital economy.
The authority is tasked with developing regulations that protect investors while curbing illegal practices associated with virtual assets, including requirements around governance, disclosure, market conduct, and operational resilience.
The Virtual Assets Regulatory Authority is the single regulatory body in Dubai that offers licensing options in the virtual assets space. Here are the key benefits:
(i.)Regulatory Compliance and Legitimacy
- Legal Authorisation: A VARA license provides legal authorization to operate within Dubai, ensuring that businesses comply with local laws and regulations governing virtual assets.
- Investor Trust: Being licensed by VARA enhances credibility and trust among investors and clients, as it signifies adherence to established regulatory standards.
(ii.)Access to a Thriving Market
- Strategic Location: Dubai's position as a global hub for blockchain and cryptocurrency innovation allows licensed firms to access a vibrant market with numerous opportunities for growth.
- Supportive Ecosystem: VARA fosters a supportive regulatory environment that encourages innovation, providing firms with the necessary framework to develop and expand their services.
(iii.)Comprehensive Framework
- Diverse Licensing Categories: VARA offers various licensing categories tailored to different types of virtual asset services, including advisory, exchange, custodial, and payment services. This flexibility allows businesses to choose a license that best fits their operational model.
- Ongoing Support: VARA provides continuous guidance and support throughout the licensing process and beyond, helping firms navigate compliance requirements effectively.
(iv.)Enhanced Operational Standards
- High Compliance Standards:
License applicants are required to implement a robust compliance and anti-money laundering framework. They also have to put in place elaborate cybersecurity policies to address risks associated with virtual asset businesses.
This commitment not only protects consumers but also helps firms mitigate risks associated with virtual asset operations.
(v.)Training and Development: Licensed entities must engage in ongoing training for staff to stay updated on regulatory changes, ensuring that they maintain high operational standards at all times.
Firms that are licensed by VARA have to put in place detailed training and development plans for their employees and senior management, thus ensuring commitment to robust operational standards and keeping pace with the fast-developing field of virtual assets.
What activities fall under the VARA Transfer and Settlement Services license?
Covered transfer and settlement activities
An entity will generally require a Transfer and Settlement Services license where it plays a role in facilitating, carrying out, or completing the movement of virtual assets between counterparties as part of a transaction. This includes circumstances in which the firm’s systems, infrastructure, or operating procedures are used to ensure that a virtual asset transaction is properly delivered and brought to settlement between the relevant parties.
Common scenarios include:
- Transfer of virtual assets between wallets or accounts, including platforms or systems that move virtual assets between users on the platform, between counterparties, or to external wallets as part of a transaction or settlement arrangement.
- Trade settlement infrastructure, where a firm is responsible for completing the delivery of virtual assets following execution on a trading venue, including coordinating the exchange of assets between buyer and seller.
- On-chain settlement services, including systems or platforms that complete and record transactions on distributed ledger networks as part of the settlement process between counterparties.
- Clearing and settlement coordination, where a firm facilitates the reconciliation and completion of obligations arising from virtual asset transactions between multiple participants.
- Infrastructure supporting institutional settlement, such as platforms used by OTC desks, broker-dealers, or trading venues to facilitate the transfer and delivery of virtual assets between market participants once trades have been executed.
In each of these scenarios, the key regulatory question is whether the firm plays a role in ensuring that a virtual asset transaction is actually transferred, delivered, and settled between parties. Where a business performs that function “by way of business”, it will typically fall within the scope of VARA’s Transfer and Settlement Services licensing perimeter.
What activities are typically outside scope?
VARA generally distinguishes transfer and settlement infrastructure from purely technical services or tools that do not involve handling or facilitating the transfer of assets between parties.
1) Technology infrastructure and software development
Examples include blockchain development services, node infrastructure, wallet software creation, or API integrations that allow clients to interact with blockchain networks. Where a provider is supplying technical tools only, and does not operate or control the transfer or settlement of assets between parties, the activity may fall outside the regulatory licensing perimeter.
2) Internal treasury transfers
Transfers of virtual assets that occur strictly within a company’s own treasury structure or between its internal wallets will generally not constitute transfer and settlement services where no third-party client activity is involved.
3) General blockchain transaction tools
Tools that merely allow users to broadcast or submit transactions directly to a blockchain network, without the provider facilitating, arranging, or intermediating the transfer itself, may also fall outside the scope of regulated transfer and settlement activity.
Important: once a firm moves beyond simply providing technology or tools and takes on responsibility for facilitating, coordinating, or executing the transfer of virtual assets between counterparties, the regulatory position changes. At that point, the activity may fall within VARA’s Transfer and Settlement Services licensing perimeter.
I want to operate a virtual asset business. Do I need a VARA license?
Yes. You will need to obtain a license from VARA, before you conduct any virtual asset business within the emirate of Dubai.
There are two stages in the licensing process. Step 1 is submission of an intial application, followed by a detailed review and in-principal approval.
VASPs are also required to be physically present in Dubai, in the form of leasing or purchasing an office.
The authority has also outlined specific requirements regarding capital adequacy, operational transparency, and compliance with anti-money laundering protocols.
What staffing and “fit and proper” expectations apply?
VARA expects advisory services firms to operate with an identifiable, accountable professional layer.
Advisory staff (including senior management and key advisory personnel) are typically expected to satisfy:
- Integrity checks (fitness, propriety, conflicts, past conduct);
- Competence checks (skills and capability to deliver advisory services responsibly);
- Financial soundness checks; and
- For analysts, formal education and relevant experience in crypto and/or financial markets (especially where the firm produces research or recommendations relied upon by clients).
What is the process to set up a VARA license in Dubai?
- Choose the zone of incorporation of the legal entity, this can be the DWTC or any other free zone in Dubai, or the Dubai Economic Department (mainland) license.
- Finalise the physical office- this will be based on the number of visas required and actual space required to carry out your business operations.
- Complete the reserving of the name and signing the corporate documents such as the Memorandum of Association.
- Submit an Initial Disclosure Questionnaire (IDQ) to VARA.
- VARA reviews the submission, revert with questions, if any, and then sends across an invoice for 50% of the application fees.
- VARA issues an Initial Approval once the fees are paid.
- Submit the Initial Approval to the contracted free zone to obtain the non-operational license.
- Complete Part 2 of the VARA application within 12 months- this includes detailed document submissions, policies and procedures, appointment of responsible individuals, Compliance and AML officers, and company secretaries.
- VARA then issues an invoice for the balance 50% of it’s application fees.
- Once paid, VARA issues the permissions to formally carry out the activities applied for. This is now a fully functional and regulated license.
Fees and capital requirements
1) VARA regulatory fees (official schedule)
Under VARA’s Schedule 2- Supervision and Authorisation Fees, the Transfer and Settlement Services activity attracts the following regulator fees:
Licence application fee: AED 40,000 (one-time; payable on submission)
Licence extension fee: 50% of the lower Licence Application Fee(s) (payable for each additional regulated VA activity added under the same application)
Annual supervision fee: AED 80,000 (payable per year, per activity). VARA also makes clear that an application will not be processed until the applicable application or extension fees have been received, and retains discretion to impose additional supervision fees depending on the VASP’s risk profile.
2) Paid-up capital (minimum capitalisation)
VARA’s Company Rulebook prescribes a minimum paid-up capital requirement for Transfer and Settlement Services of the higher of AED 500,000 or 25% of fixed annual overheads. This amount must be held and maintained at all times. Where the entity is licensed for more than one VA activity, VARA requires the VASP to hold the paid-up capital amount specified for each VA activity for which it is licensed; in other words, the capital requirement applies on an activity-by-activity basis.
Form / where capital is held: Paid-up capital must be maintained in one of the prescribed forms, including:
a trust account with a UAE-licensed bank with VARA as beneficiary;
a surety bond (with no end date) with VARA as beneficiary; or
another method specified by VARA as a licence condition.
3) Expense-based liquidity buffer (net liquid assets)
In addition to paid-up capital, VARA requires VASPs to maintain Net Liquid Assets such that:
Net Liquid Assets ≥ 1.2 × monthly operating expenses, maintained at all times.
Key practical points under the rulebook:
NLA must be reconciled daily and reported to VARA monthly.
NLA may only be maintained in permitted liquid assets, including cash/cash equivalents and, where approved by VARA, USD- or AED-referencing virtual assets.
In addition, firms are expected to maintain appropriate insurance coverage, including: professional indemnity insurance; directors’ and officers’ insurance; commercial crime insurance or similar cover for virtual assets stored in hot wallets; and any other insurance VARA may specify as a licence condition.
Ongoing compliance expectations
A well-governed transfer and settlement operation is expected to maintain controls across several key areas, including:
Transaction integrity and settlement reliability: Ensuring that virtual asset transfers and settlement processes function accurately and consistently, with controls designed to reduce the risk of failed settlements, delayed transfers, or reconciliation discrepancies.
Operational resilience and system reliability: Maintaining infrastructure capable of supporting transaction volumes and market activity without disruption, including redundancy arrangements, system uptime monitoring, and clearly defined incident response procedures.
Wallet and transaction controls: Implementing safeguards around wallet infrastructure, transaction approvals, and key management processes to ensure that virtual assets are transferred securely and only in accordance with authorised instructions.
Reconciliation and recordkeeping discipline: Maintaining clear records of transfers, settlement flows, and transaction histories, with reconciliation processes that ensure balances, transaction records, and client instructions remain accurate and auditable.
Market conduct and abuse controls: Putting in place safeguards to ensure that transfer and settlement infrastructure is not used in a manner that could enable market manipulation, wash trading, or other forms of improper market conduct.
Technology and cyber governance: Maintaining strong oversight of the systems used for transaction processing, including appropriate cybersecurity measures, system monitoring, vulnerability management, and incident response arrangements.
Frequently Asked Questions (FAQs)
1. Do I need a VARA Transfer and Settlement Services license if my platform only moves tokens between users?
Potentially. Where a business is responsible for facilitating the transfer of virtual assets between counterparties or for completing settlement following a transaction, VARA may treat that activity as regulated Transfer and Settlement Services under its framework. The key question is whether the firm is facilitating the actual movement or finalisation of virtual asset transactions between parties as a commercial service.
2. What is the difference between a VARA Custody license and a Transfer and Settlement license?
Custody focuses on safeguarding and controlling client assets or private keys. Transfer and settlement services are concerned with facilitating the movement of virtual assets and the finalisation of transactions between counterparties. A firm may perform both activities in practice, but they are regulated as separate permissions under VARA’s framework.
3. Do payment processors or remittance platforms dealing with crypto need this license?
They may. If a platform converts fiat into virtual assets and facilitates the transfer of those assets to another wallet or counterparty as part of a transaction flow, VARA may treat the transfer component as falling within the scope of Transfer and Settlement Services.
4. Does a DeFi protocol need a VARA Transfer and Settlement Services license?
This depends on the operating structure. Fully decentralised protocols without a clearly identifiable operator may fall outside VARA’s direct licensing framework. However, where a centralised entity operates the infrastructure, user interface, or settlement mechanisms serving users in Dubai, regulatory obligations may arise.
5. Does providing wallet infrastructure automatically require a Transfer and Settlement Services license?
Not necessarily. Where a business provides wallet software or related technology tools but does not facilitate or control the transfer of assets between counterparties, the activity may fall outside the Transfer and Settlement Services licensing perimeter.
6. What role does settlement play in virtual asset trading platforms?
Settlement is the stage where a completed trade is finalised and the asset is actually delivered between parties. Reliable settlement infrastructure is essential for market integrity because it ensures that transactions are executed accurately and counterparties receive the assets they expect.
7. Can an international crypto infrastructure provider apply for this license in Dubai?
Yes. Many international firms establish a Dubai-based entity, often within the Dubai World Trade Centre (DWTC) jurisdiction, in order to apply for a VARA licence. The entity must demonstrate appropriate governance structures, sufficient capitalisation, robust compliance frameworks, and a genuine operational presence in Dubai to satisfy VARA’s regulatory requirements.
8. What happens if a firm provides transfer or settlement services without a VARA license?
Operating regulated virtual asset activities in Dubai without the appropriate authorisation can expose the firm to administrative penalties, regulatory enforcement action, and reputational consequences. VARA has made clear that firms carrying on regulated activities “by way of business” must obtain the appropriate licence before operating in the market.
How can 10 Leaves help you?
10 Leaves is a Corporate Service Provider at VARA.
We provide turnkey services for VARA Licenses, from initial consultations, to assistance in authorisations, to preparation of the legal documentation, helping you navigate VARA’s Rulebooks and submit an application that is comprehensive, complete and compliant.
Our services include assistance in:
1. Reviewing the business model and advising on the applicable regulatory framework and licensing perimeter;
2. Preparing the Regulatory Business Plan and submission narrative, including advisory operating model and governance approach;
3. Preparing the policy suite required for an advisory practice (conflicts, suitability, disclosures, recordkeeping, complaints, cyber and risk);
4. Supporting controlled functions and staffing readiness (including fit-and-proper support for key persons);
5. Finalising the legal structure, including holding company setup and customisation of Memorandums; and
6. Supporting office setup and regulatory coordination through the IDQ stage and the detailed phase through to approvals.
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