The Riffle
The Virtual Assets Regulatory Authority (VARA) has issued formal guidance clarifying how Virtual Asset Service Providers (VASPs) must classify and onboard investors operating in Dubai, including Mainland and Free Zones.
Effective 8 January 2026, the guidance standardises investor categorisation, strengthens financial eligibility thresholds, and reinforces suitability assessments before clients can access higher-risk virtual asset products. VASPs are required to immediately align their onboarding, documentation and internal control frameworks to avoid regulatory action.
Key Highlights
Mandatory classification of clients as Retail, Qualified Investor or Institutional Client
AED 3.5 million net asset threshold introduced for Qualified Investors
Explicit requirement for robust suitability assessments before access to high-risk products
Clients must be given a choice of classification if eligibility thresholds are met
Cooling-off period applies where suitability assessments are failed
Investor classification must be reviewed throughout the client lifecycle
Record-keeping requirements extended to eight years
Investor Classification Framework
Under the Market Conduct Rulebook (Part IV), VASPs may only conduct virtual asset activities with clients appropriately classified.
Qualified Investor eligibility includes:
Individuals
Demonstrated knowledge of virtual assets or complex financial products
Net assets of AED 3,500,000 (excluding primary residence)
And/or annual income of AED 700,000
Legal Entities
Net assets of at least AED 3,500,000
Directors with relevant virtual asset knowledge
Eligible clients must be allowed to elect whether they wish to remain Retail or be treated as Qualified Investors.
Onboarding & Verification Requirements
VASPs are required to adopt proactive financial screening during onboarding, including:
Collection of income and net asset data
Clear disclosure of the risks and privileges attached to Qualified Investor status
Explicit client consent prior to reclassification
Where Qualified Investor status is selected, VASPs must obtain and verify:
Source of Wealth (SoW) and, where applicable, Source of Funds (SoF)
Reliable documentation evidencing liquidity and financial thresholds
Suitability Assessments: The Final Gatekeeper
Before confirming classification, VASPs must conduct a “robust and sufficient” suitability assessment demonstrating that the client:
Possesses adequate knowledge and experience
Has clearly defined investment objectives
Can financially withstand sudden or significant losses
If suitability is not met:
A mandatory one-week cooling-off period applies
Clients may continue as Retail Investors during this period
Any reassessment must be substantively different from the original test
Lifecycle Management & Client Upgrades
Investor classification is not static. VASPs must reassess classification when:
Clients request access to Qualified-only or high-risk products
Updated financial data meets eligibility thresholds
Trading behaviour indicates a material change in financial profile
Upgrades require:
Prior disclosure of implications
Explicit client consent
Full satisfaction of both financial eligibility and suitability
Until completed, clients must remain classified as Retail.
Why This Matters
This guidance signals VARA’s continued focus on:
Investor protection in high-risk virtual asset markets
Consistent onboarding standards across the ecosystem
Preventing mis-selling and inappropriate product access
Strengthening governance, documentation and supervisory readiness among VASPs
For firms, investor onboarding is no longer a front-end formality—it is a continuing compliance obligation.
Next Steps for VASPs
VASPs should:
Review and update investor classification policies
Re-engineer onboarding and suitability assessment workflows
Train front-office and compliance teams
Conduct internal gap assessments against VARA expectations
Prepare for supervisory reviews and evidence requests
Conclusion
With immediate effect, VARA expects full alignment with its investor classification and onboarding framework. Firms failing to comply risk regulatory action under the Virtual Assets and Related Activities Regulations and applicable Rulebooks.
This guidance reinforces a clear regulatory message: access to virtual asset markets must be matched with financial capacity, knowledge and accountability.
Read the full briefing document presented by 10 Leaves here -
