The Dubai Virtual Assets Regulatory Authority (VARA) has officially introduced a purpose-built regulatory framework governing the trading of Exchange Traded Derivatives (ETD) in virtual assets.
The new framework, set out in Version 2.1 of VARA’s Exchange Services Rulebook, makes Dubai one of the world’s first jurisdictions to bring virtual asset derivatives under a comprehensive, enforceable rulebook. Effective immediately, the rules apply to all Virtual Asset Service Providers (VASPs) licensed by VARA to carry out exchange services within the Emirate.
Governing complex financial products
The move arrives as global demand for derivatives exposure in virtual asset markets continues to surge. Concurrently, regulators worldwide are grappling with how to effectively govern these increasingly complex financial products within the digital asset space.
VARA’s updated framework enables licensed VASPs to offer derivative products within a clearly defined regulatory perimeter. However, this permission is subject to explicit authorisation and strict compliance with rigorous operational, prudential, and conduct requirements.
Five pillars of the new framework
To protect market participants and ensure the integrity of the broader market, the new VARA framework establishes binding requirements across five critical areas:
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Client suitability and classification: Implementing strict requirements, particularly for higher-risk products.
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Margin, leverage, and liquidation controls: Establishing mechanisms to proactively manage market exposure.
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Asset segregation: Mandating the segregation of client assets and accounts to mitigate systemic and counterparty risks.
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Enhanced disclosures: Enforcing communication obligations that strictly align with VARA’s existing Marketing Regulations.
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Regulatory intervention powers: Granting VARA the authority to act decisively in response to severe market stress or identified misconduct.
A maturing regulatory landscape
As the market continues to mature, VARA has rapidly evolved from a start-up regulator into a full-scale supervisory authority overseeing one of the world’s most active virtual asset markets.
Ruben Bombardi, general counsel at VARA, emphasized the necessity of the new rules.
“Derivatives are a natural next step in the evolution of virtual asset markets, but they demand a higher standard of governance,” Bombardi explained. “VARA’s framework gives licensed providers a clear path to offering these products responsibly, while giving market participants confidence that Dubai’s virtual asset ecosystem operates under rules that are rigorous, enforceable, and designed to protect them.”
He concluded: “This is the best way to build a market that will stand the test of time.”
VARA noted that the Rulebook is part of its ongoing commitment to ensure that innovation within the ecosystem is consistently underpinned by robust governance and transparent market practices.
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