Crypto exchange OKX receives viable product licence from Dubai's Vara

Company plans to hire more staff for its Dubai office as it seeks to expand across the Middle East

OKX, which is based in the Seychelles, has opened a new office in Dubai World Trade Centre. Pawan Singh / The National

OKX, a cryptocurrency exchange and Web3 technology company, has been granted a minimal viable product (MVP) preparatory licence by Dubai's Virtual Assets Regulatory Authority (Vara), as it seeks to boost its presence in the Middle East.

Once licensed, OKX Middle East will be able to extend its "approved suite of duly regulated virtual assets activities", the company said in a statement on Thursday.

It will provide spot, derivatives and fiat services, including US dollar and UAE dirham deposits, withdrawals and spot-pairs to institutional and qualified retail customers.

Seychelles-based OKX, which was granted a provisional virtual assets licence by Vara in July last year, has opened a new office in Dubai World Trade Centre and will seek to expand its number of staff in the emirate to 30 with a focus on local hiring and senior management, it said.

It also plans to extend its brand partnerships to the UAE with activations and activities, and expand its Middle East operations.

“Regulated entities are the future of digital assets and capital markets and Dubai and Vara have succeeded in creating a unique environment where Vasps [virtual asset service providers] can thrive," said OKX global chief commercial officer Lennix Lai.

"With the expansion into a new office this year, we are focused on hiring local staff and senior management. The Mena region has incredible potential as a centre of excellence for Web3 and virtual assets, we look forward to the opportunity to expand the already growing ecosystem across the region.”

Dubai has been taking steps to regulate the virtual assets sector while promoting its growth and adopted the Virtual Assets Regulation Law in March last year to create an advanced legal framework that protects investors and provides international standards for running the industry.

It also set up Vara to regulate the sector throughout the emirate, including special development zones and free zones, but excluding Dubai International Financial Centre (DIFC).

The authority, which will also be responsible for licensing, has legal and financial autonomy over the virtual asset sector.

In February, Vara – the first regulator to enter the metaverse – also issued regulations to offer certainty and greater clarity on the expected level of operator responsibility and mitigate market risks.

The Virtual Assets and Related Activities Regulations 2023 mandate “gold-standard risk assurance” and anti-money laundering standards to be applied by licensed businesses within the emirate, it said.

In April, it was confirmed that all operators carrying out virtual asset activities in the emirate, except for those in the DIFC, have to become fully regulated under Vara.

Operators can apply for seven types of regulated virtual asset activity licences, which include advisory, broker-dealer, custody, exchange, lending and borrowing transfer and settlement, and management and investment services.

An MVP is an early version of a service that can be released to determine market fit and gather feedback. It precedes full market product (FMP) status, Vara's website says.

Securing an operational licence is the third and final step in Vara's MVP process, following the preparatory and provisional stages.

Dubai and Vara are "world leaders in crypto regulation" thanks to their comprehensive and built from-the-ground-up framework for virtual assets and Web3, OKX global head of government relations Tim Byun said.

"Licensing in Dubai is a critical element of OKX’s global regulatory compliance strategy. In today’s uncertain market environment, it's of the utmost importance for Vasps to be highly secure, transparent, compliant and backed by strong, clear regulation.

"Under Vara’s comprehensive framework, all operators must meet high standards of compliance, risk management, security and consumer protection, benchmarked against well-known existing regulatory principles for traditional financial services.

"This provides confidence to operators and customers alike and positions the crypto and Web3 industry in Mena for increased participation and overall growth in the near and long term."