A UAE virtual assets update: Key developments from the CMA, VARA, DFSA and FSRA

The UAE’s virtual assets regime continues to evolve rapidly, with recent updates across onshore and free zone regulators. Key developments from the CMA, VARA, DFSA and FSRA reflect increased regulatory maturity, enhanced compliance expectations, and continued support for innovation.

CMA updates

The Capital Markets Authority (CMA) issued a comprehensive new Virtual Assets Framework in April 2026, expanding regulated activities from three to eight categories. 

It introduces five core modules covering:

1. general requirements;
2. conduct of business;
3. alternative trading systems
4. AML/CFT; and 
5. prudential standards. 

This federal layer brings greater harmonisation and oversight across the UAE, particularly for onshore activities, while complementing the more specialised regimes in Dubai and Abu Dhabi. This framework will operate in parallel with VARA’s Dubai-specific regime, with the CMA providing broader onshore oversight while VARA continues to regulate virtual asset activities within Dubai.

Overall, these updates reflect the UAE’s maturing virtual asset ecosystem: greater product innovation and retail access paired with higher compliance standards, clearer accountability, and closer alignment with international best practices.

VARA updates

Exchange Services Rulebook (Version 2.1)

• VARA has released Version 2.1 of its Exchange Services Rulebook (effective 31 March 2026), marking a key milestone in Dubai’s virtual assets framework.
• For the first time, exchange traded virtual asset derivatives (including futures, options, CFDs and perpetuals) are permitted under a permanent regulatory regime, subject to authorisation and oversight. 
• Retail participation is allowed within controlled limits, with enhanced requirements around client suitability, leverage, disclosures and risk management.

Formal derivatives framework

• The introduction of Part V establishes a formal regime for exchange traded derivatives, creating a new regulated activity category. 
• VASPs must obtain separate approvals and are prohibited from proprietary trading in such products, including through affiliates, aligning the framework more closely with traditional financial market standards and mitigating conflicts of interest.
• These measures aim to mitigate conflicts of interest, protect client assets, and enhance market integrity.

Virtual asset issuances

• VARA has clarified its approach to token issuance, including a distinction between categories of issuers.
• Certain Category 2 issuances may proceed without a standalone licence where a licensed distributor is involved, while Category 1 licences are required for fiat referenced and asset referenced tokens. 
• Disclosure standards have been materially strengthened: whitepapers and risk disclosures now treated as legally binding documents rather than purely informational materials.

Margin trading and controls

• New safeguards for margin trading include early warning systems, real-time monitoring, structured liquidation protocols, and mandatory insurance or reserve fund arrangements. 
• Any material changes to trading systems or risk models require prior VARA approval, supported by strengthened record-keeping and audit trail obligations. 
• These enhancements reinforce operational resilience and investor protection amid volatile market conditions.

VARA AML/CFT circular 

• VARA’s recent circular reinforces AML/CFT and sanctions obligations for licensed VASPs, emphasising a risk based approach and strong governance. 
• Firms are required to undertake customer due diligence at onboarding and for transactions above AED 3,500, with enhanced due diligence applied in higher risk scenarios. 
• The circular also stresses timely suspicious activity reporting to the UAE FIU, ongoing sanctions screening, and comprehensive record-keeping, underscoring VARA’s commitment to maintaining the UAE’s international reputation on financial crime prevention. 

DFSA updates

Crypto Token Framework Update 
The DFSA has shifted away from maintaining a prescribed list of “recognised” crypto tokens, instead allowing firms to determine “suitable” tokens based on their own assessments. 

• Firms will need to implement robust internal due diligence processes, including technical, legal and market risk assessments for each token.
• There is likely to be increased regulatory scrutiny and supervisory engagement, particularly where firms list higher-risk or novel tokens.
• This change introduces greater flexibility and may encourage greater product innovation, but also increases accountability, requiring firms to conduct initial and ongoing suitability assessments (at least every six months) and report regularly to the DFSA.

Compliance Arrangements Review
In April 2026, the DFSA published findings from its review of firms’ compliance arrangements, identifying weaknesses in governance, oversight and monitoring functions. Notably, many firms were found to have limited compliance resources. 

The DFSA has indicated that inadequate frameworks may lead to increased regulatory scrutiny, reinforcing expectations for robust compliance infrastructure.

FSRA updates

In Abu Dhabi Global Market (ADGM), the FSRA continues to refine its digital assets regime. 

• While crypto mining itself is not a regulated financial service requiring FSRA authorisation, it is treated as a licensable commercial activity under the Registration Authority. 
• Entities must obtain a commercial licence and comply with operational resilience, corporate governance, and energy-use expectations. This creates a viable pathway for mining operations within a well-regulated ecosystem, often integrated with broader VASP activities such as custody or staking.
• The FSRA’s position reflects a clear regulatory distinction between financial services and infrastructure-level digital asset activities.
• It also supports the development of institutional-grade mining operations within a regulated environment, supporting Abu Dhabi’s broader digital asset strategy.

Our team advises on VARA, DFSA, CMA and FSRA virtual asset regulation, licensing strategy and compliance frameworks. If you would like to discuss how these recent developments may impact your business, please contact Tom Bicknell and Barkha Doshi.