Neither "Dubai" nor "Abu Dhabi" is a single licence name
VARA's virtual asset regulatory scope covers mainland Dubai and the relevant free zones, but does not include the Dubai International Financial Centre (DIFC). The Abu Dhabi Global Market (ADGM) is a financial free zone that applies its own financial services regime, and "a company incorporated in Abu Dhabi" cannot automatically be equated with being licensed by ADGM. Accordingly, the specific jurisdiction in which the office, contracting and service provision take place should first be clarified, and the competent authority then identified; the fact that a registered agent can incorporate a company does not mean that the financial regulator has already consented to the conduct of business.
Look first at regulated activities, then at the assets permitted for use
VARA has dedicated rules for the virtual asset transfer and settlement business; other activities such as exchange and custody should be verified separately for authorisation, and all functions cannot be inferred from a single activity. The ADGM requires operation under an FSRA financial services permission and its specific conditions. Its amendments relating to fiat-referenced tokens (FRTs) took effect on 1 January 2026 and cover accepted tokens, regulated activities and client token arrangements. The fact that a certain coin is popular in the market does not mean it already meets the asset admission requirements of the jurisdiction to which the platform belongs.
For payments to ordinary merchants, central bank rules may change product choices
The Central Bank of the UAE's Payment Token Services Regulation distinguishes issuance, exchange, custody and transfer, and imposes limits on merchants' acceptance of virtual asset payments. Within the scope of application of Article 2 of that Regulation, payment for general goods or services cannot freely accept foreign-currency stablecoins; the payment use of approved foreign-currency payment tokens is mainly limited to the purchase of virtual assets or their derivatives, while dirham payment tokens are handled separately under licensed issuance requirements. That article expressly excludes the financial free zones and cannot be mechanically applied within the ADGM or DIFC, but the provision of services from within a zone to clients outside it requires re-examination.
Compare using two scenarios: merchant business and institutional trading
Assume that Option A serves catering merchants in mainland Dubai, and Option B provides services relating to approved tokens to institutions in the ADGM. The same qualifications and token lists cannot be applied to both merely because both use US dollar stablecoins. For A, it should first be confirmed whether merchant payments are permitted and what central bank and local admissions are required; for B, the FSRA approved activities, tokens and client conditions should be verified. Only then should the team, banking, asset custody and costs be compared; that is an executable choice of location. A licence in any one place should not be promoted as covering the whole of the UAE or the entire Middle East.
Recommended actions
- Clarify the actual place of business in the mainland, an ordinary free zone, the DIFC or the ADGM, and allocate the competent authority according to the scope of contracting and client services.
- Map exchange, custody, transfer and settlement, issuance and fiat-currency payments item by item to licences and counterparties, and verify each condition.
- Verify the token and the payment use separately, and in particular confirm whether different restrictions apply to ordinary merchant receipt of payments and to the purchase of virtual assets.
- Before applying, conduct a preliminary verification of the complete fund flow with the relevant competent authorities or local counsel, and assess the boundaries of services provided from the financial free zone to outside the zone.
Information note: This article provides general information and does not replace legal advice based on specific facts.
References
- VA Transfer and Settlement Services Rulebook — Dubai Virtual Assets Regulatory Authority
- Digital Assets in ADGM — Abu Dhabi Global Market / Financial Services Regulatory Authority
- ADGM FSRA finalises regulatory framework for Regulated Activities involving Fiat-Referenced Tokens, 31 October 2025 — Abu Dhabi Global Market / Financial Services Regulatory Authority
- Payment Token Services Regulation, Articles 2 and 5 — Central Bank of the UAE
