The Virtual Assets Regulatory Authority (VARA), the entity that oversees crypto activities in Dubai, has asked Binance to provide more information about its business requirements in its efforts to tighten regulatory guardrails in the emirate, Bloomberg reported.
Citing three anonymous sources, Bloomberg reported on April 5 that the regulator had asked Binance to submit more information about the exchange’s ownership structure, governance and auditing processes. The people close to the matter said VARA has requested the same details from global crypto players looking to be licensed in Dubai.
VARA officials have also required Binance to provide similar information, on top of board procedures, at its global group level, with queries taking longer to address given the exchange’s size and complexity, two of the sources said.
The increased scrutiny over virtual assets service providers (VASPs) in Dubai adds to Binance’s woes as it faces more pressure from regulators in the United States.
Last week, the United States Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance and its CEO, Changpeng Zhao, alleging that the exchange engaged in improper compliance procedures and trading.
Zhao has since rejected the claims, calling them “an incomplete recitation of facts,” and that Binance “does not trade for profit or ‘manipulate’ the market.”
My Response to the CFTC Complaint | Binance Blog https://t.co/TadyotM7HN
— CZ Binance (@cz_binance) March 27, 2023
Binance received a preparatory minimal viable product (MVP) license from VARA in September last year. The permit allows the platform to set up an office in the United Arab Emirates and provide digital asset exchange services to pre-qualified investors. However, the company can’t yet offer locally regulated digital asset services in the emirate.
The largest crypto exchange by trading volume would need to submit the necessary requirements to VARA to upgrade to an operational MVP license, which would allow it to offer its services to qualified individual and institutional investors, before securing a full market product permit.
Currently, only digital asset custodian Hex Trust has secured an operational MVP license from the Dubai regulator.
According to VARA’s website, VASPs already providing their services must comply with their requirements before the end of June.