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Dubai’s Virtual Asset Regulatory Authority (VARA) has issued new rules for regulating digital currency and derivatives trading, imposing strict governance, disclosure and risk management standards for licensed companies.
The rules cover margin trading and derivatives traded on stock exchanges and give the agency broad powers, such as suspending trading and modifying margin requirements if needed.
According to the instructions, companies can only provide margin financing and securities lending services after receiving explicit approval, and are required to assess the customer’s financial suitability and investment experience.
There is also a ban on using one client’s money to fund another client’s trades, and firms are required to monitor accounts and issue early alerts if margin levels fall.
As for derivatives, in addition to the establishment of specialized insurance funds, their submissions require separate approval to ensure that clients understand the risks and their ability to meet their financial obligations.
VARA also requires companies to establish clear rules of conduct and continuously monitor the market, while requiring them to share trading data with authorities.
The requirements also include the appointment of an independent board member and annual disclosure of management remuneration within a framework of increasing transparency and protecting investors.
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