In the ever-evolving landscape of virtual assets, the need for regulation has become paramount to ensure the integrity, security, and transparency of Virtual Asset Service Providers (VASPs). The Virtual Assets Regulatory Authority (VARA) stands as a cornerstone for the regulation of VASPs in the UAE, providing a framework for compliance that is essential for the sustainable growth of this industry.
As a firm deeply engaged in assisting VASPs on their regulatory voyage, we understand the needs of our VASP clients to meet the desired outcome of becoming regulated. After engaging and discussing with a myriad of institutions we have been able to assert a few common items that are being overlooked by VASPs that if overlooked could hinder the regulatory application if not addressed.
Lack of Knowledge about Internal Governance
One of the fundamental aspects that often escapes the radar of small to medium-sized VASPs is the importance of robust internal governance. Governance lays the groundwork for regulatory compliance, outlining the roles, responsibilities, and decision-making processes within the organization. Lack of clarity in internal governance can lead to inefficiencies, mismanagement, and ultimately hinder the smooth sailing through regulatory requirements.
Lack of Readiness for Policies and Procedures
VARA compliance is not just a box to tick; it’s a commitment to maintaining a high standard of operational practices. Small to medium-sized VASPs often underestimate the significance of well-documented policies and procedures. These documents serve as a roadmap for compliance, guiding the organization and its employees in adhering to regulatory requirements.
Generic Lack of Awareness of Compliance Requirements
Awareness is the first step toward compliance. Surprisingly, many VASPs underestimate the complexity and depth of the compliance requirements set forth by VARA. From reporting obligations to customer verification, ignorance can lead to costly mistakes and regulatory violations.
IT Security, Disaster Recovery, and Business Continuity
The digital nature of virtual assets amplifies the importance of robust IT security, disaster recovery, and business continuity planning. Inadequate measures in these areas not only pose a threat to the integrity of the VASP but also raise red flags for regulatory bodies.
Conclusion
The journey to VARA compliance requires a holistic approach that encompasses internal governance, well-documented policies, heightened awareness, and fortified IT security. By addressing these often-overlooked aspects, small to medium-sized VASPs can navigate the regulatory waters with confidence, paving the way for a secure and compliant future.
Remember, compliance is not just a regulatory obligation; it’s a commitment to the trust and security of the virtual assets ecosystem.
Take the first step towards a secure and compliant future. Contact us today and let’s start exploring the best solutions for your business.
