3 Things You Need to Know About VARA's New Derivatives Regulations

On March 31, 2026, Dubai's Virtual Assets Regulatory Authority (VARA) published Version 2.1 of its Exchange Services Rulebook — a comprehensive, purpose-built regulatory framework for virtual asset exchange-traded derivatives (ETDs).  

Version 2.1 is a binding, enforceable rulebook that applies to all VASPs offering or intending to offer derivatives contracts under their exchange license.

The framework covers futures, options, contracts for difference (CFDs), and perpetual contracts. VASPs cannot offer any of these products without explicit VARA approval, and the application process requires detailed submissions including product terms, margin schedules, close-out procedures, insurance fund arrangements, and client communication plans. 

The rulebook is effective immediately. 

Here are three things every compliance professional, VASP, and market participant should know. 

1. Initial Margin Requirements, Leverage Limits and Differences Between Retail and Institutional Investors 

One of the most significant aspects of the new framework is that it formally opens crypto derivatives to retail investors, not just institutional and qualified participants. This marks a deliberate shift toward a more inclusive market model. But VARA has built a sophisticated, tiered approach rather than a blunt one-size-fits-all regime. 

For retail investors, the rules are prescriptive. Under Rule V.G.8 of the rulebook, retail leverage is capped at a maximum of 5:1, with a mandatory minimum ETD Initial Margin of 20% of the notional position value. Please note that this is a floor, not a ceiling. VASPs must impose higher margin requirements where 5:1 is not suitable for a specific retail client or a specific product. VASPs are also required to monitor and regularly review the outcomes retail investors are experiencing, tracking the number and percentage of retail clients suffering losses (Rule V.G.9). If disproportionate losses are identified, VASPs must investigate the cause and implement an action plan. 

For institutional and qualified investors, the approach is different. Under Rule V.G.11, VASPs must have their own policies for determining maximum leverage — but there is no hard numerical cap prescribed by the rulebook. Leverage limits for professional clients are set by the VASP based on factors including trade size, settlement type, volatility of the underlying asset, the speed of the VASP's liquidation engine, and the likelihood of negative equity balances (Rule V.G.12). VARA retains the right to override and impose higher margin requirements for any VASP, product, or underlying asset at any time. 

The suitability gating is equally tiered. Retail investors must pass a detailed assessment covering their knowledge and experience in ETD trading, investment objectives, financial position, risk appetite relative to net worth, and ability to bear sudden and significant losses (Rule V.C.2). Where a client is assessed as unsuitable for a specific product, the VASP must block access immediately — both at onboarding and on an ongoing basis. VARA has also added an anti-gaming provision: training tools provided to help clients pass suitability assessments must not be designed solely to help clients pass without developing genuine understanding (Rule V.C.6). 

2. VARA Intervention Powers 

The rulebook gives VARA broad authority to intervene directly in market activity — and in urgent scenarios, it can do so without prior notice. 

Under Rule V.B.4, VARA can instruct any VASP, at any time and at its sole discretion, to: suspend ETD Services for specific products, clients, or underlying assets; close-out or liquidate existing positions; increase initial or maintenance margin requirements; increase insurance fund amounts or implement an insurance fund where one does not yet exist; amend close-out, liquidation, and risk management mechanisms; require additional insurance coverage; and increase the VASP's operational exposure requirements. 

Rule V.B.5 is the critical provision: while VARA will endeavour to provide as much notice as possible, if any action is deemed necessary to avoid severe market impact, VARA may mandate VASPs to act immediately without advance warning or negotiation period.  

3. Governance, Surveillance, and Insurance Requirements  

The operational and governance standards in the rulebook are quite straightforward.  

On governance, the rulebook mandates that every VASP offering exchange services have at least one independent director on its board (Rule I.A.1). VARA defines independence through a strict set of disqualifying criteria — including prior senior management roles within two years, board tenure exceeding seven years, 10% or more equity ownership, relationships with the VASP's auditor, and links to entities receiving substantial funding from the VASP's group (Rule I.A.4). Boards must also convene at least quarterly and establish remuneration, nomination, and audit committees (Rules I.A.2 and I.B.1). Board minutes must be retained for a minimum of eight years. 

On market conduct, VASPs must publish and enforce a code of conduct for all platform participants, with disciplinary powers spanning from warnings, training requirements, and compliance audits all the way to trading prohibitions, expulsions, and criminal referrals (Rule III.A.3). VASPs must share surveillance data with VARA, including information on large positions, inventory levels, and actions taken to manage position limits (Rule III.B). Fee structures must be transparent, fair, and non-discriminatory. 

On asset protection, client ETD Trading Accounts must be segregated from all other trading accounts (Rule V.D.5). Non-ETD clients cannot be exposed to any loss mutualisation originating from derivatives activity (Rule V.D.2). VASPs offering ETD services must maintain a mandatory insurance fund, with a minimum balance sufficient to cover negative equity balances under extreme but plausible market conditions (Rule V.I.2-3). The insurance fund can hold virtual assets, AED, USD, or approved AED/USD-referenced stablecoins. 

On settlement, all exchange transactions must be completed within 24 hours of execution (Rule III.D.1). And VASPs are explicitly prohibited from trading their own book with no proprietary trading in ETDs offered through the VASP's own services (Rule V.A.4). 

What You Need to Do 

VASPs and other market participants offering or looking to offer crypto derivatives should contact their compliance teams or advisors to ensure compliance with these new requirements. ACX Compliance clients can contact their usual contact.  

The ACX Compliance team, as the largest crypto specialised compliance services team globally, is available to answer any questions on the above. Info@acxcompliance.com 

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