The VARA Broker-Dealer licence, activity by activity.

Most businesses that ask us whether they need a VARA licence end up, on analysis, needing this one. Broker-Dealer Services is the activity VARA uses for almost every client-facing intermediary in virtual assets that is not an exchange, a custodian or a fund manager. It is also the activity most often misread, because its definition is wider than the word broker suggests.

Who needs a Broker-Dealer licence

Schedule 1 of the Virtual Assets and Related Activities Regulations 2023 defines Broker-Dealer Services as any one of six things. Doing any one of them by way of business in or from Dubai, outside the DIFC, needs the licence:

• Arranging orders for the purchase and sale of virtual assets between two parties. An introducer that only passes on contact details is usually outside this; one that takes and routes orders is inside it.
• Soliciting or accepting orders for virtual assets and accepting fiat or other virtual assets for them. This is the limb that catches retail-facing brokerage apps, crypto-for-cash counters and voucher sellers.
• Facilitating the matching of transactions between buyers and sellers, which covers request-for-quote and bulletin board models that stop short of an order book.
• Dealing on the firm's own account as a dealer, which is the classic OTC desk quoting two-way prices to clients.
• Making a market using client assets.
• Providing placement, distribution or other issuance related services to clients issuing virtual assets: launchpads, token sale platforms and anyone running a sale for an issuer.

VARA decides whether something is done by way of business by looking at whether the firm holds itself out as doing it, the regularity, scale and continuity of the activity, and whether there is a commercial element such as remuneration. A desk that occasionally fills a friend's order for a spread is not safe because it is small.

Two things fall outside. A firm trading only its own book, with no client on the other side, is not carrying on Broker-Dealer Services, although it needs a VARA No Objection Certificate and must register once it invests USD 250 million equivalent in any rolling 30 day period (see our note on the proprietary trading threshold). And a firm that has no Dubai presence, does no activity in the Emirate and does not market into the UAE is outside VARA altogether. Everything between those two lines needs analysis, and our UAE licence finder is a quick first pass.

Token sale distribution

The Broker-Dealer Services Rulebook that took effect on 19 June 2025 moved distribution into its own Part IV, Licensed Distribution Services. The definition is deliberately broad: issuance related services can include end-to-end creation, placing, distribution and marketing conducted for or on behalf of the issuer, as well as the actual sale. If you run the marketing campaign for a token sale from Dubai, you are within it.

The obligations are demanding. The distributor must ensure, beyond all reasonable doubt, the quality of every issuer and token it distributes, carry out documented due diligence on both (including the whitepaper and risk disclosure statement under the VA Issuance Rulebook and smart contract audits with findings remediated), carry a prescribed VARA disclaimer on all documents, and file the whitepaper, risk disclosure statement, a signed compliance declaration and its due diligence reports with VARA. Nothing may be placed until a 15 Working Day submission period has passed without comment or objection, and VARA's silence is expressly not an approval.

What the licence permits

Within the licence, a Broker-Dealer may deal as principal, including as riskless principal, to satisfy client orders, place virtual assets and manage its own inventory, and may execute as agent. The conduct rules that come with it are specific:

• Best execution applies to every client order. There are only two narrow exceptions, both requiring that the client asked for a quote to execute at the firm's discretion and that the firm does not fill the order as principal: where the client is another VARA-licensed VASP, or a Qualified or Institutional Investor.
• No payment for order flow. The firm may not receive any remuneration, discount or non-monetary benefit for routing client orders to a particular venue.
• Public disclosures on the website, including how prices are determined and the identity of any liquidity source receiving 20% or more of client orders.
• Quarterly review of execution quality where orders are routed automatically or flow is internalised.
• Advisory Services as an add-on, provided the firm also meets the Advisory capital requirement and the Advisory Services Rulebook.
• Margin trading only if expressly stipulated in the licence, after a separate VARA approval, with initial margin of at least 20% for retail clients.

What it does not permit

A Broker-Dealer licence is not a general crypto licence. It does not cover maintaining an order book or operating a venue that matches and executes trades (Exchange Services), safekeeping client assets (Custody Services), discretionary portfolio management or managed staking (VA Management and Investment Services), or lending and borrowing. It does not allow the firm to use client money or client virtual assets except as the Compliance and Risk Management Rulebook permits. Anonymity-enhanced cryptocurrencies are prohibited outright. And marketing remains subject to the Marketing Regulations 2024, whatever the licence says.

Capital and prudential requirements

Under Part VI of the Company Rulebook, paid-up capital for Broker-Dealer Services is:

• the higher of AED 400,000 or 15% of fixed annual overheads where the firm uses a VARA-licensed custodian, or is otherwise approved on that basis during licensing; and
• the higher of AED 600,000 or 25% of fixed annual overheads in all other cases.

Paid-up capital must be held in a trust account with a UAE licensed bank naming VARA as beneficiary, by a surety bond naming VARA with no end date, or as VARA otherwise specifies. On top of it sit net liquid assets of at least 1.2 times monthly operating expenses, and professional indemnity, directors' and officers' and commercial crime insurance with a regulated insurer. Our paid-up capital guide sets out how the activity figures stack where a firm holds more than one licence.

People

VARA licenses people as much as companies. A Broker-Dealer needs:

• Two Responsible Individuals, each a full-time employee, fit and proper, UAE resident or a UAE passport holder, and approved by VARA during licensing.
• A Compliance Officer with five years' compliance experience, UAE resident or a UAE passport holder, full-time and reporting directly to the board. The Compliance Officer cannot sit on the board, but may also act as MLRO.
• An MLRO with two years' AML/CFT experience.
• A Company Secretary independent of senior management and reporting to the board.

Only three roles can be outsourced: MLRO, CISO and DPO, and VARA can require any of them in-house at any time. Detail on approvals is in our guide to VARA key personnel, and VARA also expects a real Dubai office (see physical presence).

VARA's fees

Under Schedule 2 of the Regulations, Broker-Dealer Services carries an application fee of AED 100,000 and an annual supervision fee of AED 200,000. VARA's licensing page states that the initial fees paid at the first stage are typically 50% of the application fee, with the balance and the first year's supervision fee paid at the second stage. Each additional activity adds an extension fee of 50% of the lower application fee, which matters for the common pairing of Broker-Dealer with VA Management and Investment Services. Trade licence costs with Dubai Economy and Tourism or the free zone are separate. Our VARA licence cost guide puts the full budget together.

The application stages

1. Perimeter and structure. Which limbs of Broker-Dealer Services you actually carry on, whether custody is in-house or outsourced, and whether VARA is the right regulator at all.
2. Initial Disclosure Questionnaire. The IDQ is filed through Dubai Economy and Tourism or the relevant Dubai free zone, with a business plan and details of beneficial owners and senior management.
3. Approval to Incorporate. This lets the firm incorporate, lease an office and hire. It does not permit any virtual asset activity.
4. Full application. The policy suite mapped to the Company, Compliance and Risk Management, Technology and Information, Market Conduct and Broker-Dealer Rulebooks, the business risk assessment, financial projections, capital evidence and approved persons.
5. Review, meetings and interviews. VARA raises queries, usually over more than one round, and may interview key individuals.
6. Licence with conditions. Capital in place, insurance bound, staff in seat and systems ready. Operations start only once the conditions are met, and supervision starts immediately (see the first 90 days).

How long it takes

VARA publishes no service standard. In Neo Legal's experience a well-prepared application runs eight to twelve months from IDQ to operational licence, and the applicant controls most of that: the quality of the first submission, the speed of query responses, banking and capital readiness, and whether approvable UAE-resident officers are identified early. A full breakdown is in how long a VARA licence takes. No adviser can promise a date.

Common reasons VARA pushes back

From the applications we have prepared and reviewed, the queries that cost the most time are predictable:

• A business model that does not match the activities applied for. A matching engine described as brokerage, or market making with the firm's own capital presented as client business.
• An unclear custody model. The capital tier, the custody arrangements and the client agreement must all tell the same story.
• A best execution policy that misstates the rule, for example treating best execution as optional for agency orders, or a single-venue model with no documented quarterly review.
• Policies carried over from another licence type, still describing exchange, staking or lending services the applicant does not offer.
• People problems: Responsible Individuals who are not full-time or not resident, a Compliance Officer on the board, or a Company Secretary who is also senior management.
• Group structure. VARA treats entities under common control as a group, so the shareholder chain and any affiliated trading or payments business must be disclosed and explained.
• Distribution plans not addressed. An applicant that intends to run token sales but has no Part IV due diligence framework.

Broker-Dealer plus custody: the separate entity rule

Rule III.B.5 of the Custody Services Rulebook requires a custodian to be a separate legal entity from any member of its group that provides other virtual asset services. The only exception lets a custody entity also hold VA Transfer and Settlement Services. A broker that wants to hold client assets itself therefore needs two companies and two licences, with a dedicated custody team that has no conflicting duties, and its own Custody capital of the higher of AED 600,000 or 25% of fixed annual overheads.

The alternative is a VARA-licensed third-party custodian. That keeps the Broker-Dealer on the lower capital tier and avoids a second build, at the cost of dependence on the custodian's onboarding, fees and service levels. For most new desks the third-party route is the faster start, with a group custody entity added once volumes justify it. The decision needs to be made before the IDQ, because it changes the capital, the policies and the corporate chart.

VARA or another regulator

VARA covers activity in or from Dubai, excluding the DIFC. A business whose clients and operations sit elsewhere in the UAE may be looking at the federal Capital Market Authority's dealing activities, and institutional desks sometimes prefer the ADGM. The comparison is in CMA vs VARA. Neo Legal advised Animoca Brands on its VARA licence for Broker-Dealer and VA Management and Investment Services, and runs Broker-Dealer applications from perimeter analysis to the first supervisory cycle.

Frequently asked questions

What is a VARA Broker-Dealer licence?

It is the VARA licence for Broker-Dealer Services, one of the virtual asset activities in Schedule 1 of the VARA Regulations 2023. It covers arranging orders, accepting client orders against fiat or virtual assets, facilitating matching, dealing on the firm's own account with clients, making a market using client assets, and placement and distribution services for token issuers, in or from Dubai outside the DIFC.

Does a crypto OTC desk in Dubai need a Broker-Dealer licence?

Yes, if it deals with clients. A desk that quotes clients prices and settles against them, or executes client orders with other liquidity providers, is carrying on Broker-Dealer Services. A desk that trades only its own capital with no clients needs a VARA No Objection Certificate instead and must register once it invests USD 250 million equivalent in any rolling 30 day period.

How much capital does a VARA Broker-Dealer need?

Paid-up capital is the higher of AED 400,000 or 15% of fixed annual overheads where the firm uses a VARA-licensed custodian, otherwise the higher of AED 600,000 or 25%. It is held in a UAE bank trust account or surety bond naming VARA as beneficiary, and the firm must also hold net liquid assets of at least 1.2 times monthly operating expenses.

What are VARA's fees for a Broker-Dealer licence?

VARA charges an application fee of AED 100,000 and an annual supervision fee of AED 200,000. Adding a further VARA activity costs an extension fee of 50% of the lower application fee. Trade licence costs with Dubai Economy and Tourism or the free zone are separate.

Can a VARA Broker-Dealer distribute a token sale?

Yes, under Part IV of the Broker-Dealer Services Rulebook, Licensed Distribution Services. The distributor must carry out due diligence on the issuer and the token, file the whitepaper, risk disclosure statement, a compliance declaration and its due diligence reports with VARA, and wait 15 Working Days without comment or objection before placing anything.

Can a Broker-Dealer also provide custody?

Not in the same company. VARA's Custody Services Rulebook requires a custodian to be a separate legal entity from any group member providing other virtual asset services. A broker either uses a VARA-licensed third-party custodian, which also keeps it on the lower capital tier, or sets up its own separately licensed custody entity.

This article is general information on the position at the date shown and is not legal advice. Token classification and licensing turn on the specific facts of each project; speak to us before relying on it.