VARA Rulebook of 2025 · Dubai
Activity rulebook for Lending and Borrowing Services: policies, activity-specific and other disclosures, general requirements, client reporting and valuation, record-keeping, risk management and due diligence, and client agreements. Current version effective 19 June 2025 (first version February 2023).
The Lending and Borrowing Services Rulebook applies to every VASP licensed by VARA to provide Lending and Borrowing Services in Dubai outside the DIFC. Schedule 1 of the VARA Regulations defines the activity as carrying out a contract under which a virtual asset is transferred or lent by lenders to borrowers who commit to return it on request or at the end of the agreed period. The Rulebook applies in addition to the Regulations and the four compulsory Rulebooks, and the version in force took effect on 19 June 2025.
Disclosure is the heaviest part. Besides conflicts, privacy, whistleblowing and complaints policies, the VASP must publish how clients can access and withdraw their assets in volatile markets, how client assets are used and protected from counterparty risk (including whether loans are over-collateralised), the risk of loss, and how liquidity risk is managed. For assets it borrows from clients it must disclose the denomination, rate and nature of interest as an annual percentage yield, whether the figure is an estimate, how often interest accrues and whether it is simple or compound. It must also publish which services are available to which client types, a lending and borrowing asset and liability report updated at least every three months, and its protocol governance arrangements.
The conduct Part requires the VASP to keep enough virtual assets to meet client obligations and enough borrower collateral, and to notify VARA immediately if either may not be met. Clients must know when assets cannot be withdrawn; client assets may be used only on the terms of the Client Agreement and are held for the client unless the agreement says otherwise; and counterparties must be checked regularly for loan purpose, business, financial position and liquidity. Clients receive written statements at least monthly covering balances, transactions, interest and collateral, positions are independently valued, transaction and counterparty records are kept for eight years, and risk management and due diligence are audited by an independent third party. Client Agreements must state loan-to-value ratios, interest terms, rights over collateral, withdrawal rights, default consequences and risk warnings, and obtain the client's consent to the use of its assets.
Under the Company Rulebook, paid-up capital for this activity is the higher of AED 500,000 or 25% of fixed annual overheads; Schedule 2 of the Regulations sets an AED 100,000 application fee and an AED 200,000 annual supervision fee.
VASPs licensed by VARA for Lending and Borrowing Services in Dubai outside the DIFC, including yield and collateralised lending providers, their Boards and Staff, third parties through which the services are offered, and the lending and borrowing clients and counterparties they deal with.
English official text in 29 rules. Open the full text or jump to a provision:
| Rules I.A.1 and I.A.2 | Written policies must cover clients' ability to access and withdraw virtual assets, including in periods of extreme volatility, and be reviewed at least yearly. |
| Rule I.B.1 | Website statements on conflicts, withdrawal rights in volatile markets, protection and uses of client assets, counterparty risk including over-collateralisation, risk of loss and liquidity risk management. |
| Rule I.C.1 | For assets borrowed from clients, disclose interest denomination and choice, rate as an annual percentage yield, whether fixed or variable or estimated, accrual frequency and simple or compound basis. |
| Rules I.D.1 to I.D.3 | Publish an explanation of services by client type and any regulatory restrictions, a lending and borrowing asset and liability report updated at least every three months, and protocol governance arrangements. |
| Rules II.A.1 and II.A.2 | The VASP must always hold enough virtual assets to meet client obligations and ensure borrowers post agreed collateral, and must notify VARA immediately if either is or may not be met. |
| Rules II.A.3 to II.A.5 | Clients must be told when assets cannot be withdrawn; held assets may be used only under the Client Agreement terms and are held on behalf of the client unless the agreement expressly says otherwise. |
| Rule II.A.6 | Regular due diligence on clients and counterparties, collecting loan purpose, nature of business, financial situation and liquidity, so client assets are not exposed to undue counterparty risk. |
| Rules II.B.1 to II.B.4 | Monthly written statements to clients showing account value, transactions, interest credited or debited and collateral posted, with independent valuation of positions under documented valuation policies. |
| Rule II.C.1 | Records of all lending and borrowing transactions, Client Agreements, counterparty agreements, client instructions and counterparty due diligence must be kept for at least eight years. |
| Rules II.D.1 to II.D.5 | Before lending or borrowing, assess client and transaction risk and collateral suitability and enforceability; monitor liquidity and market risk; keep collateral adequate; have risk management independently audited. |
| Rules II.E.1 and II.E.2 | Client Agreements must set out the assets, loan-to-value ratios, interest terms, rights over collateral, withdrawal and termination rights, default consequences and risk warnings, and obtain consent to the use of client assets. |
The Rulebook sets no fines of its own. Breaches are enforced under Part IX of the VARA Regulations, with indicative fines under Schedule 3 for violations of Rules, and may lead to enforcement notices, limits on the licensed activity, or suspension or revocation of the Licence.
Crypto lending, yield and collateralised credit products are where clients most often underestimate the licence. A product that pays a yield on deposited tokens, or lends them on, is likely to fall within the Schedule 1 definition, and promoting it engages the Marketing Regulations' limits on return claims and credit. We help clients test the product against the definition with their licensed advisers, then build the corporate side: the Dubai entity with at least AED 500,000 paid-up capital, the Board and Responsible Individuals, the corporate approvals behind client and counterparty agreements, and a compliance calendar for the quarterly asset and liability report and monthly client statements. Polaris is not licensed by VARA and does not lend, borrow or arrange virtual-asset credit.
| Cites | Dubai Virtual Assets Law (VARA) |
“Cites” and “Cited by” are built automatically from references in the full texts held in this library; they cover only instruments in the library.
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