Vara’s Transfers And Settlements Rulebook

VARA published its long awaited Transfers and Settlements Rulebook in June and its release signified the publishing of all of VARA’s applicable regulatory rulebooks.

Onramping and offramping of virtual assets remains a hot topic in the UAE and in the digital assets world today. VARA’s latest rulebook demystifies the process of obtaining the relevant licensing in order to provide such services (among others) legally in the UAE.

VARA defines “Transfers and Settlements” as “the transmission or transfer, and/or settlement of Virtual Assets from one Entity to another Entity or from one Entity to another VA Wallet, address or location.”

In order to obtain such a licence, a VASP must have internal policies and procedures in place for how they will rectify any non-executed, defectively executed or incomplete VirtualAssets transmission or transfer, and/or settlement in the course of providing VA Transfer and Settlement Services, including refunding affected clients.

There are also a host of public disclosures that VASPs must make on their websites.

Importantly, a few key points have emerged:

1. Clear and explicit client consent and/or instructions are needed to move any VAs for transfer and settlement purposes.
2. All VASPs must also comply with relevant CBUAE regulations.
3. Liability for errors in transfers and settlements fall on the VASP and must be rectified by them.
4. Communicate all risks associated with such transactions to clients in advance.
5. Provide receipt for such transactions.

The drafting of clear and compliant policies, creation of internal organisational structures to ensure compliance and robust and explicit terms and conditions will go a long way towards solving most of the aforementioned requirements.

Most notable, however, is the CBUAE point as we are still awaiting formal regulations from the CBUAE on the virtual asset front.

It will be interesting to see how this latest rulebook is interpreted and implemented in the weeks to come as many VASPs have been in the process of applying for the relevant licences under this rulebook.