Dubai’s Virtual Assets Regulatory Authority (VARA) has granted a preliminary virtual asset service provider (VASP) license to Nexo, a decentralized lending platform based in Bulgaria, allowing it to operate within and from the Emirates.
This approval signifies the initial phase toward obtaining a complete license, which involves securing an initial provisional permit, a preparatory license, and finally, an operational license. Nexo’s regional entity, Nexo DTC, aims to achieve full approval for a range of activities, including lending and borrowing, investment management, and broker-dealer operations.
To obtain the full VASP license, Nexo must satisfy specific criteria outlined by VARA. Once these requirements are met, the company will be eligible for operational approval, enabling it to provide regulated digital asset services such as exchange, broker-dealer, investment management, and lending and borrowing services.
Dubai’s Prime Minister and Ruler, Sheikh Mohammed bin Rashid Al Maktoum, approved a new virtual assets law in March 2022, establishing a regulatory framework for cryptocurrencies in the city. VARA was subsequently appointed to oversee and regulate the sector within Dubai’s special development and free zones, with the aim of safeguarding investor assets and positioning the region as a prominent hub for Web3 technologies.
Dubai, along with Abu Dhabi, has actively pursued initiatives to attract financial institutions and position itself as a global crypto hub. While Nexo DTC’s initial approval has not yet been reflected in VARA’s public records, updates are typically made promptly following such developments.
Kalin Metodiev, co-founder and managing partner at Nexo, has expressed enthusiasm for aligning the company’s market strategies with the guidance provided by Dubai’s Virtual Asset Regulatory Authority.
Despite previous regulatory challenges, including settlements with the SEC and legal disputes in Bulgaria, Nexo remains committed to expanding its operations and complying with regulatory requirements.
Dubai’s emergence as a crypto-friendly jurisdiction has garnered praise from various industry players, with several crypto exchanges and firms receiving operational licenses from the regulatory body. These developments underscore Dubai’s commitment to fostering innovation and providing a supportive environment for crypto-related businesses.
The crypto regulatory framework introduced in Dubai mandates all crypto exchanges and service providers to apply for operational licenses, reflecting the city’s proactive approach to regulating the rapidly evolving crypto industry. With a clear regulatory framework and robust oversight, Dubai continues to attract crypto firms seeking a conducive regulatory environment for their operations.