Summary
- Payward, the parent company of Kraken, has received initial regulatory approval from Dubai's Virtual Asset Regulatory Authority (VARA).
- Offered services will encompass spot and margin trading, OTC, staking, transfers, and institutional services via Kraken Prime.
- Customers in the UAE can fund their accounts and withdraw in dirhams through a locally licensed subsidiary.
On Thursday, cryptocurrency exchange Kraken announced that it has obtained regulatory approval to function in Dubai following its parent company Payward's acquisition of preliminary broker-dealer and investment management authorization from the emirate's Virtual Asset Regulatory Authority.
This authorization allows Kraken to provide virtual asset services to both retail and institutional investors in Dubai, as per the company's announcement. Clients in the United Arab Emirates will have access to spot and margin trading, over-the-counter services, staking, crypto transfers, and the institutional platform Kraken Prime.
Traders in the UAE will be able to connect with Kraken's global order books, which span Europe, the United States, and Asia-Pacific markets. They can fund their accounts and withdraw funds in dirhams via Payward FZCO, a subsidiary regulated locally.
The company intends to broaden its offerings in Dubai to include derivatives, lending, and new investment products for eligible clients.
“Dubai established a regulatory framework for crypto before many places even recognized the asset class,” stated Arjun Sethi, Co-CEO of Payward and Kraken. “This regulatory clarity is why substantial liquidity and institutional capital are now present in the UAE. Operating under VARA allows Kraken to serve clients through a local, regulated entity instead of from abroad.”
Sethi highlighted the advantages of Dubai's regulatory environment compared to other markets.
"Clients in the UAE have access to the same order book, balance sheet, and multi-asset coverage that we maintain in all other markets," Sethi explained. "The key difference is that the regulations are clearly documented and the oversight is local."
Established in 2022, VARA aims to regulate digital asset businesses, creating one of the most extensive frameworks for cryptocurrency globally. The authority has already licensed significant exchanges like Binance, Crypto.com, and OKX, positioning the emirate as a central crypto hub in the Middle East.
VARA's licensing categories encompass trading, custody, and advisory services, attracting firms looking for regulatory certainty amid ambiguity in other regions, particularly appealing to institutional players due to the established operational guidelines.
Kraken is among several crypto companies recently adapting to Dubai's regulatory environment. Earlier this year, Ripple secured VARA approval for its RLUSD stablecoin, while Animoca Brands received a license as the authority intensified its oversight. The regulator has also shown its enforcement capabilities, instructing KuCoin in March to halt services to Dubai residents for operating without the necessary authorization.
Last November, Kraken submitted a request for a pending U.S. IPO after raising $800 million at a valuation of $20 billion. Additionally, Payward has recently applied for a national trust bank charter from the U.S. Office of the Comptroller of the Currency.