VARA’s New Playbook for Crypto Derivatives: What Dubai’s Firms Must Now Follow

Dubai’s Virtual Assets Regulatory Authority (VARA) published Version 2.1 of its Exchange Services Rulebook on March 31, setting formal rules for crypto exchange-traded derivatives (ETDs) for the first time.

The updated framework applies to all licensed Virtual Asset Service Providers (VASPs) offering exchange services in the emirate. It covers client suitability, leverage controls, asset segregation, and disclosure standards.

What Dubai’s New Derivatives Framework Requires

VARA now allows both institutional and retail participation in crypto derivatives. However, retail access comes with strict guardrails.

Retail leverage is limited to a maximum of 5:1, requiring a minimum 20% initial margin. That figure sits well below offshore platforms, where exchanges have previously offered leverage of up to 100x on certain contracts.

Before onboarding any retail client, VASPs must conduct suitability assessments covering financial position, trading experience, and risk tolerance.

Firms must restrict access where products fall outside a client’s risk profile.

Margin accounts must be segregated from standard trading accounts. VASPs cannot use one client’s funds to finance margin positions for another client, even with consent.

Monthly written statements are also required.

VARA Retains Emergency Powers

The regulator granted itself broad authority to step in during periods of market stress. Available measures include suspending specific products, requiring position liquidations, and increasing margin requirements.

In urgent scenarios, VARA can act without prior notice to contain market disruption.

VASPs must also maintain an insurance fund for ETD services, with minimum balances set by the regulator. The fund may hold virtual assets, fiat currency, or approved stablecoins.

The framework builds on Version 2.0, released in May 2025, which first codified margin trading rules and tighter compliance obligations for Dubai-based VASPs.