Nexo secures preliminary approval for crypto services in Dubai
Crypto lender Nexo AG has been awarded preliminary approval from Dubai’s Virtual Assets Regulatory Authority (VARA) for various cryptocurrency-related activities.
This early approval is a step forward in the process of obtaining a full Virtual Asset Service Provider (VASP) license. It also places Nexo among the first cryptocurrency lenders to enter the UAE market.
The VASP license from VARA, which serves as the single custodial entity mandated to license and govern crypto activities in Dubai, is a key milestone for Nexo’s plans to expand internationally.
With this upcoming license, Nexo plans to offer a range of services, such as broker-dealer activities, lending and borrowing, and management and investment services in Dubai. However, the company must first meet additional conditions and localization requirements specified by VARA before it can start its operations in Dubai, subject to further regulatory checks and approval.
The expansion into the Middle East represents a strategic step for Nexo as it aims to tap into the region’s growing interest in cryptocurrencies and cater to the increasing demand for crypto trading platforms.
“From the UAE, the global leader for vision, governance, and innovation, Nexo aims to contribute to the regional ecosystem through pioneering lending, brokerage, management, and investment solutions. Nexo is enthusiastic about the pursuit of new market strategies aligned with the transformative guidance of Dubai’s Virtual Asset Regulatory Authority,” said Kalin Metodiev, CFA, Co-founder and Managing Partner at Nexo.
Against the backdrop of a crashing market and burned investors, Dubai has recently sealed a landmark rulebook that governs how the Emirate will regulate cryptocurrency activities. The Virtual Asset Regulatory Authority (VARA), which serves as the single custodial entity mandated to license and govern crypto activities in Dubai, released guidelines for Virtual Assets Service Providers (VASPs) in 2023.
The new rules create a legal framework for crypto aimed at protecting investors and designing much-warranted international standards for industry governance. In addition, the VARA now has enforcement powers in Dubai’s special development and free zones with the exception of the Dubai International Financial Centre.
The regulations set out four compulsory rulebooks and activity-specific rulebooks that VASPs must comply with to offer their services. The “Full Market Product Regulations” include guidelines that lay down the rules for compliance, risk management, market conduct, and other requirements.
Nexo aims to contribute to this ecosystem by offering innovative financial solutions in line with Dubai’s regulatory guidelines. The lender is a key player in the digital asset industry, providing a wide range of services including trading solutions, liquidity aggregation, and credit lines backed by digital assets. In 2022, Nexo also launched an investment branch, Nexo Ventures, supporting over 60 portfolio companies. The company has handled over $130 billion in transactions for more than 7 million users across over 200 jurisdictions.
