Dubai, UAE: Dubai’s Virtual Assets Regulatory Authority (VARA) has strengthened its expectations for reserve-asset audits by issuing a new circular on 6 October 2026. The update follows VARA’s thematic review of Proof of Reserve Assets reports submitted by licensed Virtual Asset Service Providers (VASPs) during 2025.
The latest development focuses on making independent reserve audits more consistent, detailed, and reliable. It is part of VARA’s wider focus on how regulated VASPs safeguard client Virtual Assets and demonstrates compliance with its rules.
What Is the Latest VARA News?
The key development is not the introduction of a new 1:1 reserve rule. VARA’s existing rules already require VASPs to maintain Reserve Assets equal to 100% of their liabilities to clients and to hold those reserves on a 1:1 basis in the same Virtual Asset.
VASPs must also reconcile their Reserve Assets on a daily basis and have them independently audited at least once every six months. The independent audit report is then submitted with the relevant subsequent quarterly report to VARA.
The new circular provides clearer expectations around how these reserve arrangements should be independently assessed.
Why Has VARA Strengthened the Audit Approach?
VARA’s latest circular comes after its review of Proof of Reserve Assets reports from 2025. The review has led the regulator to clarify the minimum expectations for independent audits.
The focus is on obtaining reliable evidence when assessing whether client Virtual Assets are properly safeguarded. Where independent verification is reasonably available, auditors should not rely only on statements made by management.
This makes the quality of audit evidence an important part of demonstrating that a VASP is meeting its reserve and safeguarding obligations.
For regulated businesses, strong Auditing and Assurance processes can help support accurate financial information, effective controls and better preparation for independent regulatory reviews.
Who Does This Apply To?
The update is relevant to VASPs regulated by VARA in Dubai. These businesses need to ensure that their reserve arrangements, reconciliation processes and audit procedures remain aligned with VARA requirements.
Client Virtual Assets also need to be handled under VARA’s safeguarding requirements. Existing rules restrict the rehypothecation of client Virtual Assets, subject to the conditions set by the applicable regulatory framework.
This means VASPs should not treat an external audit as a replacement for their own internal controls. Businesses remain responsible for maintaining proper reserve and safeguarding arrangements.
What Happens If Businesses Ignore the Requirements?
Failure to properly maintain or demonstrate compliance with reserve and client-asset safeguarding requirements can create regulatory concerns for a VASP.
The latest circular therefore gives regulated businesses a reason to review their existing processes rather than waiting until the next audit or regulatory submission.
A weak reconciliation process, incomplete records or insufficient audit evidence can make it harder to demonstrate that client assets are properly protected.
What Should VASPs Do Now?
VARA-regulated VASPs should review their current reserve procedures and confirm that daily reconciliation is being completed properly. They should also review how client Virtual Assets are held and safeguarded and make sure the information required for independent audits can be supported with appropriate evidence.
Businesses should also review their wider Tax and Compliance framework so that regulatory obligations are tracked and addressed on time. Where a VASP is assessing a transaction, structure or third-party arrangement, appropriate Due Diligence Services can also support a more careful review.
Why This Matters for Dubai’s Virtual Asset Market
VARA’s latest circular shows that regulatory focus is moving beyond simply reporting reserve figures. The quality of verification and the way client assets are safeguarded are also becoming central to demonstrating compliance.
For VASPs operating in Dubai, keeping accurate records and maintaining strong internal processes is therefore essential. Dubai Business and Tax Advisors (DBTA) can help businesses strengthen their business compliance and review financial and regulatory processes with a practical, professional approach.
The latest VARA development is a clear reminder that maintaining reserves is only one part of compliance. Businesses must also be able to demonstrate, through appropriate controls and independent verification, that those reserves and client assets are being properly managed.
