IFZA crypto licence: what IFZA allows, and when you need VARA

The short answer

• Technology only — usually IFZA alone. Blockchain software development, smart-contract and Web3 app development, and similar technology services that do not hold, move or trade virtual assets for others can generally be licensed as an IFZA free zone company, subject to IFZA approving the activities.
• Services to others — IFZA plus VARA. If the company will provide virtual-asset services to clients, it needs a VARA licence before it starts. VARA regulates virtual assets across Dubai's mainland and free zones, except DIFC.
• Trading your own money — usually no VARA licence, but rules apply. VARA says proprietary traders using only their own funds do not currently need a licence, but must register with VARA once trading volumes pass its threshold.

Which activities need a VARA licence?

VARA licenses these virtual-asset activities. If your business plan includes any of them for clients, plan for a VARA application alongside the company setup:

• Advisory services
• Broker-dealer services
• Custody services
• Exchange services
• Lending and borrowing services
• Management and investment services
• Transfer and settlement services
• Category 1 virtual-asset issuance

NFT marketplaces also need a VARA Exchange and/or Broker-Dealer licence, depending on how the marketplace works. Businesses that only provide distributed-ledger technology without any virtual-asset activity may register with VARA voluntarily.

How does the VARA process work for a free zone company?

The application does not go straight to VARA. It is submitted through the company's commercial licensor — the Department of Economy and Tourism for mainland companies, or the free zone authority — which passes it to VARA for assessment. VARA first reviews an Initial Disclosure Questionnaire describing the activities, business model, governance and compliance set-up. An initial approval is not permission to serve clients; operations start only once the full licence is granted. Minimum capital, compliance staff and policies depend on the activity, and the process usually takes several months.

Not every licensor handles every type of virtual-asset business in the same way. Before you apply, we confirm whether IFZA can act as the commercial licensor for your activities or whether another Dubai licensor is the better route.

Banking, VAT and Corporate Tax

• Banking: banks treat crypto and virtual-asset businesses as higher risk, so expect enhanced due diligence and a longer review. See bank account opening assistance.
• VAT: since 15 November 2024 the transfer and conversion of virtual assets is VAT-exempt (Cabinet Decision No. 100 of 2024, applied retrospectively from 1 January 2018). Explicit fees such as commissions generally remain subject to VAT at 5%.
• Corporate Tax: the free zone 0% rate applies only to qualifying income if the Qualifying Free Zone Person conditions are met, so check how your income will be treated before choosing the structure.

Rules, activity lists and fees change. We confirm the current position with the licensing authority and send a written, itemised quote before you commit. Approvals are decided by IFZA, VARA and the other authorities.

Sources: VARA licensing FAQ (vara.ae); Dubai Media Office, 16 April 2023 (VARA regime for DET and free zone companies); Cabinet Resolution No. 111 of 2022; Cabinet Decision No. 100 of 2024 amending the VAT Executive Regulation; Federal Decree-Law No. 47 of 2022 and Cabinet Decision No. 100 of 2023 (Qualifying Free Zone Persons); official IFZA website (ifza.com).