Why Governance Is Becoming Increasingly Crucial for UAE’s Virtual Asset Market

The UAE market of virtual assets is drawing more institutional interest as the regulatory oversight and governance framework becomes critical in the way in which businesses related to digital assets conduct their activities. On October 22, 2026, Bybit stated that its Dubai subsidiary, Bybit Fintech FZE, obtained a complete VASP license from VARA of Dubai to provide services related to spot exchanges. The license serves as an illustration of what services an exchange may provide under the licensing framework.

The news comes against the background of growth of the UAE market of digital assets as well as focus of institutions on the issues of custody, compliance documentation, risk management, and operational control. Such concerns go beyond the mere receipt of regulatory approval.

UAE Virtual Asset Market Growth and Institutional Demand

Gulf News analysis by Ahmed Khizer Khan indicated that the UAE was the beneficiary of cryptocurrency value totaling more than $56 billion in the 2024-2025 reporting period, which is a 33% increase from the previous period. 

According to the analysis, which quoted Chainalysis’s 2025 Geography of Cryptocurrency Report, large institutional transactions were up 54.7%, whereas institutional transactions were up 37.2%.

Source: Gulf News

Such statistics give a good perspective on the increasing institutional participation in the market. Market participants such as family offices, asset managers, and corporates need to have an infrastructure for trading that takes care of operational risks and documented procedures for dealing with client funds and transactions.

With increasing institutional participation, governance becomes a key issue to consider in addition to access to the market. It is necessary to have clear accountability and compliance for control and oversight. According to Gulf News, the infrastructure for virtual assets should continue to evolve as per the requirements of institutional market participants.

How License Under VARA Functions in Dubai

VARA oversees virtual assets operating in mainland Dubai and free zones, excluding the Dubai International Financial Centre (DIFC). The public register provided by VARA lists the licensed providers and their permissible activities along with the type of customers that may be served by them.

In principle approval differs from the full license in that it is a step towards getting the license. As per VARA, the in-principle approval gives the applicant permission to fulfill their pending obligations but does not permit the firm to engage in virtual assets operations and serving any customers.

The distinction is important as a firm’s presence globally does not imply that it is allowed to offer all services in Dubai. The licensing permission is granted to the particular firm named in the registration document.

Services Covered Under Bybit’s Dubai Spot Trading License

Bybit Fintech FZE appears under reference VL/26/10/003 on VARA’s public register. The firm was issued a valid license as of October 20, 2026. The company announced the approval two days later.

The authorization covers spot exchange services, which involve buying and selling the underlying crypto assets. It does not include derivatives trading under the approval described by the company.

Bybit says it serves more than 80 million users worldwide and established its international headquarters in Dubai in 2022. It also previously obtained a full Virtual Asset Platform Operator license from the UAE’s Securities and Commodities Authority in October 2025, although that entity’s service restrictions excluded Dubai.

Bybit’s Chief Legal and Compliance Officer, Peter Loo, said the company hopes to expand its licensed activities to include derivatives, subject to further regulatory approval. A company spokesperson also said Bybit must complete VARA’s launch process and satisfy operational requirements before starting spot trading in Dubai. 

Why Governance Is Important Other than Licensing

The license identifies the functions that the provider is allowed to perform, while governance addresses the management of the functions. The Gulf News analysis highlights segregation of clients’ assets, transparent execution, compliance documentation, and risk controls as critical standards for institutional involvement.

Proper custody and record keeping can assist institutions in gauging the nature of their asset holding and transaction processing. Compliance record keeping ensures oversight, while well-defined risk management controls define the processes for handling risks.

While such measures cannot reduce all the risks related to virtual assets, they demonstrate why institution involvement requires more than simply having access to the exchange. The quality of operational support is still an important criterion for assessing service providers.

What does the Bybit License Mean for the Market?

The Bybit license is an example of the way the UAE virtual asset market can combine regulatory permissions with clear operation requirements. The license permits some exchanges but not derivatives.

The distinction needs to be understood by institutions and other market participants between licensing, governance, and being operationally ready. Licensing determines what a provider can do, and governance is related to how its services are run. Both are relevant to understanding the development of Dubai’s regulated virtual asset sector.

FAQs

What is VARA?

VARA is Dubai’s Virtual Assets Regulatory Authority, responsible for regulating virtual assets across the emirate’s mainland and free zones, except the DIFC.

What is allowed by Bybit’s Dubai license?

The license allows Bybit Fintech FZE to offer exchange services for institutional, qualified, and retail customers.

Is derivatives trading included in Bybit’s license?

No, the license at the moment covers only exchange services and derivatives are still under regulation.