VARA Proprietary Trading: Obligations, Dos and Don'ts for Prop Traders in Dubai

Your core obligations

These obligations come directly from VARA's Regulations and VARA's published guidance. They apply to any entity in Dubai (outside the DIFC), including companies in DMCC and other free zones.

• Hold a VARA No Objection Certificate (NOC). VARA's guidance states that proprietary trading must obtain a NOC at all times; it is usually applied for through your commercial licensor (DET or your free zone).
• Register with VARA if you hit the threshold. Under Regulation IV.A.7, an entity that actively invests its own portfolio in virtual assets at or above USD 250 million in any rolling 30-calendar-day period must register before investing that volume, or within three working days of doing so.
• Trade only your own assets. The Regulations state that investing your own portfolio does not permit accepting or trading any assets belonging to another entity.
• Remember registration is not a licence. Registration does not permit any VA activity for others and is not an authorisation or licence from VARA.
• Follow the marketing rules. VARA's marketing regulations apply to licensed and unlicensed entities alike, so how you describe your business in public matters.

Where proprietary trading ends and licensed activity begins

The biggest risk for prop traders is drifting into a licensed activity without noticing. VARA's guidance draws the line clearly: proprietary traders trade their own funds and do not trade as a service to friends and family or to third parties. Proprietary trading also does not include using your own funds to buy or sell virtual assets with a third party at the initiation of that third party.

In practice, that means the following typically fall outside proprietary trading and into licensed activities such as Broker-Dealer or Management and Investment Services:

• Quoting prices to, or dealing with, counterparties who come to you to trade (OTC-style dealing or market-making for others)
• Pooling money from investors, partners, friends or family and trading it
• Running a funded-trader or copy-trading programme for others
• Holding or moving assets on behalf of anyone else

Dos

• Keep evidence that every trade uses the company's own funds: capital injections, shareholder loans and bank statements should all be documented.
• Monitor your trading volume on a rolling 30-day basis, not month by month, so you can register in time if you approach the threshold.
• Keep your NOC, commercial licence activities and actual business aligned. If your model changes, reassess before you act.
• Document your source of funds and source of wealth. Banks and exchanges will ask, and VARA can look at it if you register.
• Screen counterparties and wallets for sanctions and illicit exposure using blockchain analytics (KYT).
• Keep clear records of trades, venues, wallets and decisions so you can explain your activity if asked.
• Review your position with a compliance adviser whenever you add a new product, venue or partner.

Don'ts

• Don't accept money or assets from anyone else, even informally or "temporarily".
• Don't trade at a counterparty's request or quote prices to clients without the right licence.
• Don't describe yourself as an exchange, broker, fund or VASP on your website or social media.
• Don't market virtual asset products or services to the public without checking VARA's marketing rules.
• Don't assume a free zone company licence covers virtual asset activity. VARA regulates Dubai's free zones, apart from the DIFC.
• Don't wait until month-end to check your volume against the registration threshold.

How VARA looks at prop trading firms

VARA's stated position is that no virtual asset activity is exempt from supervision, and registered proprietary traders are subject to regulatory oversight. When VARA assesses a prop trading firm, the questions follow directly from its rules: Is the firm genuinely trading only its own funds? Who initiates its trades? Does anyone else's money or assets touch the business? Has it registered on time if it reached the threshold? And does its marketing suggest it offers services to others?

VARA also has a track record of enforcement against firms carrying on unlicensed activity. In October 2025 it announced fines of between AED 100,000 and AED 600,000 against 19 firms for unlicensed virtual asset activity and breaches of its marketing regulations, together with cease-and-desist orders. Those cases show that being incorporated in a Dubai free zone does not remove the need to comply with VARA's rules.

A practical compliance checklist

• VARA NOC in place and kept current
• Commercial licence activities match what the firm actually does
• Written confirmation that only company funds are traded, with supporting bank and capital records
• Rolling 30-day volume tracker with an alert well before USD 250 million
• Registration plan ready in case the threshold is reached
• Source-of-funds file for shareholders and capital
• Counterparty, sanctions and wallet screening (KYT) procedures
• Website and social media reviewed against VARA's marketing rules
• Periodic independent compliance review

A note on thresholds

VARA's FAQ expresses the registration threshold in more than one way in places, including as AED 1 billion in rolling trading volume. The binding figure in the Regulations is USD 250 million invested in any rolling 30-calendar-day period. Firms near either figure should plan conservatively and confirm their position with VARA.