Crypto lending can look simple on the surface. One client supplies virtual assets, another borrows them and the platform manages collateral, repayments and interest. In Dubai, however, offering this service commercially puts you inside a detailed regulatory framework.
A business providing virtual asset lending or borrowing services in or from Dubai generally needs authorisation from the Virtual Assets Regulatory Authority (VARA). This applies across Dubai mainland and its free zones, with the exception of the Dubai International Financial Centre (DIFC) excluded from VARA's jurisdiction.
The VARA lending and borrowing license Dubai framework covers much more than paying a government fee. Applicants need adequate capital, experienced management, compliance systems, liquidity controls, borrower due diligence, documented collateral policies and clear client agreements.
What Are Lending and Borrowing Services Under VARA?
VARA defines Lending and Borrowing Services around contracts where virtual assets are transferred or lent by one or more lenders to borrowers, with the borrower committing to return the same assets when requested or at the end of an agreed period.
In practical terms, the category can cover business models where a platform accepts virtual assets from lenders and provides them to borrowers under agreed repayment, collateral and interest terms.
A company should not assume that calling its product "yield", "financing", "liquidity" or another name takes it outside the regulatory perimeter. VARA looks at the actual activity being performed.
A VARA commercial activity licence is also different from an ordinary Dubai trade licence. You still need the appropriate company registration through the Department of Economy and Tourism (DET) or an eligible Dubai free zone, but that commercial registration does not replace regulatory approval from VARA.
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VARA Lending and Borrowing Licence Fees in Dubai
VARA currently sets the following regulatory charges for Lending and Borrowing Services.
Cost | Current VARA Requirement |
Licence application fee | AED 100,000 |
Annual supervision fee | AED 200,000 |
Initial Stage 1 payment | Typically 50% of application fee |
Additional regulated activity | 50% of the lower applicable application fee |
Paid-up capital | Higher of AED 500,000 or 25% of fixed annual overheads |
For a business applying only for Lending and Borrowing Services, the stated VARA application and first-year supervision charges therefore come to AED 300,000.
That does not mean AED 300,000 is your total setup cost.
You may also need to budget for company incorporation, office premises, employee visas, compliance personnel, insurance, technology systems, cybersecurity, legal documents, audit work and banking. VARA also states that its regulatory charges are separate from fees imposed by other authorities.
Paid-Up Capital Requirement
A Lending and Borrowing VASP must maintain paid-up capital equal to the higher of: AED 500,000 or 25% of fixed annual overheads.
VARA requires paid-up capital to be maintained in an approved form, which can include a trust account with a UAE-licensed bank naming VARA as beneficiary, an eligible surety bond or another arrangement specified by VARA. Capital must be reconciled monthly.
There are separate liquidity requirements too. A VASP must maintain net liquid assets of at least 1.2 times monthly operating expenses, with daily reconciliation and monthly reporting to VARA.
Main Requirements for a VARA Lending and Borrowing Licence
Getting licensed means showing VARA that the company can operate safely after approval, not simply submitting incorporation documents.
Corporate Structure and Management
VARA expects clear information on the legal entity, ultimate beneficial owners, source of funds, organisational structure, governance arrangements and senior management.
VASPs must appoint two Responsible Individuals. Each must be sufficiently senior, employed full time, considered fit and proper and either resident in the UAE or a UAE passport holder. Their appointments require VARA approval.
A Compliance Officer is also required. VARA states that the Compliance Officer must have at least five years of relevant compliance experience, be a UAE resident or UAE passport holder, work full time for the VASP and report directly to its board.
The company must also appoint a Money Laundering Reporting Officer with at least two years of AML/CFT experience who satisfies the fit-and-proper requirements.
Liquidity and Collateral Controls
A crypto lender cannot simply rely on the market value of its loan book.
VARA requires Lending and Borrowing VASPs to maintain sufficient virtual assets to meet client obligations and ensure borrowers have posted the agreed collateral. These positions must be monitored and regularly audited.
If those liquidity or collateral requirements are no longer met, or may materially fail in the foreseeable future, the VASP must notify VARA immediately.
The business must also assess the borrower's risk profile, the suitability of collateral and whether that collateral can legally be pledged. Liquidity and market risks need regular testing. VARA requires these lending risk controls and due diligence arrangements to be audited by an independent third party.
Client Agreements
Your lending contract is a major regulatory document.
VARA expects agreements to explain the assets being lent or borrowed, applicable loan-to-value ratios, interest calculations, collateral rights, withdrawal rights, default events, termination rights and the risks faced by the client.
If the VASP intends to use a client's virtual assets during the lending activity, the client's consent must be obtained clearly and transparently.
Client Reporting and Public Disclosures
Licensed platforms have continuing reporting duties after launch.
Clients must receive written statements at least monthly showing their virtual asset positions, lending and borrowing transactions, interest credited or charged and collateral information. Positions must also be independently valued.
The VASP must publicly update a lending and borrowing asset and liability report at least every three months. The report should cover virtual assets held, borrowed, lent or pledged as collateral and explain how the assets are held.
Transaction records, client agreements, instructions and relevant counterparty information generally need to be maintained for at least eight years.
How to Apply for a VARA Lending and Borrowing Licence
VARA uses a two-stage licensing process for new applicants. Its official application page sets out the route clearly.
Confirm your regulated activity and jurisdiction. Define exactly how funds, virtual assets, collateral and interest will move. Decide whether the legal entity will be incorporated through DET or an eligible Dubai free zone.
Submit the Initial Disclosure Questionnaire. The IDQ is submitted through DET or the chosen free zone. VARA may request the regulatory business plan, ownership information and details of senior management.
Pay the initial application amount. VARA states that the Stage 1 payment is typically 50% of the applicable licence application fee. For Lending and Borrowing Services, that would normally mean AED 50,000.
Obtain Approval to Incorporate. ATI allows you to proceed with incorporation and operational setup. You can arrange office space, recruit staff and build systems, but you cannot start providing regulated virtual asset services yet.
Build the regulated operation. This includes governance, compliance, AML/CFT procedures, technology controls, cybersecurity, risk management, capital arrangements, insurance, client agreements and lending-specific policies.
Submit the Stage 2 licence application. VARA reviews the full documentation and may request meetings, interviews or further information. Official application documentation can include incorporation records, UBO details, source-of-funds evidence, financial projections, proof of capital, insurance certificates, succession arrangements and a wind-down plan.
Pay the balance and first-year supervision fee. Once the remaining regulatory requirements are satisfied, the remaining application fee and first annual supervision charge become payable before final licensing.
Approval to Incorporate or an in-principle status should never be treated as permission to serve customers. VARA's public register states that applicants without a full VASP licence cannot begin regulated operations.
How Long Does VARA Licensing Take?
VARA does not publish a universal processing period for a Lending and Borrowing Services licence.
The timeline depends on the business model, ownership structure, management team, quality of the regulatory submission and the number of questions raised during review.
Be cautious with websites promising approval within a fixed number of weeks. Lending businesses involve collateral, liquidity and counterparty exposure, so the regulatory review can be more detailed than a standard company formation.
We’ll model the requirements and send back a single-page breakdown within 24 hours.
Compliance After You Receive the Licence
A VARA licence creates ongoing obligations.
A Lending and Borrowing VASP must comply with its activity-specific rulebook plus VARA's Company, Compliance and Risk Management, Technology and Information and Market Conduct Rulebooks. The current Lending and Borrowing Services Rulebook has been effective since June 19, 2025.
Insurance is another continuing requirement. Depending on the operation, VARA requires suitable professional indemnity, directors' and officers' and commercial crime insurance, with coverage appropriate to the business and its risks.
Marketing needs regulatory attention too. VARA's current marketing rules apply to virtual asset promotions targeting the UAE, and regulated VA activities can only be marketed by or on behalf of an appropriately licensed VASP.
You can review VARA's official Lending and Borrowing Services Rulebook before finalising the operating model.
Common Cost Mistake: Treating Capital as a Licence Fee
Paid-up capital should not be added to regulatory fees as though it were money paid to VARA.
Consider a company with AED 2 million in annual fixed overheads.
Twenty-five per cent equals AED 500,000, so its minimum capital requirement would remain AED 500,000. The separate application and first-year supervision charges would be AED 300,000.
The company's real cash planning must therefore account for regulatory fees, required capital, liquidity requirements and operating expenses separately.
That distinction gives you a much more realistic setup budget.
Conclusion
A VARA Lending and Borrowing licence is designed for businesses taking real financial and counterparty risk with virtual assets.
The starting regulatory figures are straightforward: AED 100,000 application fee, AED 200,000 annual supervision fee and paid-up capital of at least the higher of AED 500,000 or 25% of annual fixed overheads. The harder part is building the operating framework behind those numbers.
You need credible management, experienced compliance personnel, borrower due diligence, collateral controls, liquidity monitoring, client reporting, proper agreements, insurance and technology capable of supporting a regulated lending operation.
Frequently Asked Questions
How much does a VARA lending and borrowing licence cost in Dubai?
VARA currently charges AED 100,000 as the application fee and AED 200,000 as the annual supervision fee for Lending and Borrowing Services. Other incorporation, office, insurance, staffing, audit and operational costs are separate.
What is the minimum capital requirement?
The paid-up capital requirement is the higher of AED 500,000 or 25% of the VASP's fixed annual overheads. VARA also applies separate net liquid asset requirements.
Can I start crypto lending after receiving Approval to Incorporate?
No. ATI allows you to establish the entity and complete operational preparations. VARA states that regulated virtual asset activities cannot begin until the full VASP licence has been issued.
Does VARA regulate crypto lending in DIFC?
No. VARA's jurisdiction covers Dubai mainland, special development zones and Dubai free zones but excludes DIFC. Activities in DIFC fall under its separate regulatory framework.
Does a lending platform have to disclose its loan book?
VARA requires a Lending and Borrowing VASP to publish an asset and liability report at least once every three months, including information on virtual assets held, lent, borrowed or pledged as collateral.
Is there a fixed VARA licence approval timeline?
VARA does not publish a fixed standard approval period for Lending and Borrowing Services. The review depends on the applicant's business model, ownership, staffing, systems and readiness to meet VARA's regulatory requirements.
