Binance has won an Operational MVP License from Dubai’s Virtual Assets Regulatory Authority (VARA), the exchange announced in a blog on July 31. This makes the world’s largest crypto exchange by trading volume the first to secure such a license in the world.
By reason of the license, qualified users in Dubai will be able to access regulated virtual asset services in Dubai under VARA’s investor protection and market assurance standards going forward.
“We are pleased to announce that our Dubai subsidiary, Binance FZE, has become the first exchange to receive the Operational Minimum Viable Product (MVP) license from Dubai’s Virtual Asset Regulatory Authority (VARA),” the exchange wrote in the blog post.
The Operational MVP license enables Binance to offer services in Dubai approved by VARA, including exchange and broker-dealer services — initially to institutional and qualified retail investors,” it added.
Binance had obtained a provisional MVP license in March 2022 and a preparatory MVP license in September 2022.
Following satisfactory compliance, VARA has decided to grant the exchange permission to render services as a virtual asset exchange services provider, and as a virtual asset broker-dealer services provider for institutional and qualified retail investors in Dubai.
According to Binance, “This landmark development underscores our dedication to building a compliant exchange in partnership with local regulators and within Dubai’s unique regulatory framework for Virtual Asset Service Providers (VASPs).”
These services include the ability to safely convert virtual assets to fiat under VARA-designated standards compliant with the intergovernmental Financial Action Task Force.
A huge milestone
Binance has faced several regulatory challenges in many jurisdictions. Even currently, the exchange stands trial in the U.S. on allegations of security laws violations and mishandling of customer funds. It has also failed to secure operational licenses in many countries, leading to its exit in some.
Securing this operational license in Dubai is therefore a major milestone for the exchange. Already, the exchange had considered looking to the Middle East as regulatory pressure has been intense in the U.S. and Europe.
Before now, Binance CEO Changpeng Zhao had expressed interest in building a physical global headquarters for the exchange in Dubai. This license brings the Binance chief closer to actualizing that dream.
Responding to the license, Head of Regional Markets at Binance, Richard Teng said: “We are honored to be the first exchange to be granted an operational Minimum Viable Product License by VARA — a result of over a year of due diligence, collaboration, and consistent demonstration of responsible intent – that now allows us to be able to leverage the potential of a progressive regulatory framework, enabling innovation while furthering user protection.”
The UAE supporting crypto
The United Arab Emirates (UAE), just like any other jurisdiction, is interested in protecting investors in crypto. However, at the same time, the country seeks to foster the growth of the crypto and blockchain industry by making clear regulations for the industry.
With this approach, the UAE will be a refuge for crypto companies like Binance that are under pressure in countries like the U.S. where there’s no regulation for the crypto industry but regulators use enforcement as their means of regulation.
Many other crypto exchanges have secured licenses in Dubai, and with Binance’s success, many more are likely to pursue the same.