Ripple and VARA Drive Major Shift in UAE Crypto Market

Dubai’s balancing act, supporting innovation while mandating robust compliance, could serve as a blueprint for emerging economies seeking to unlock the value of Web3 without exposing their financial systems to undue risk. Ripple has officially launched its blockchain-based cross-border payments platform in the United Arab Emirates, marking a key milestone for crypto adoption in the region. The development coincides with a major regulatory update by Dubai’s Virtual Assets Regulatory Authority (VARA), which has issued revised Rulebooks mandating all licensed digital asset service providers to comply with enhanced operational and risk standards by June 19. Ripple Launches Cross-Border Blockchain Payments in UAE, Signaling a New Era for Crypto Adoption in the Region Ripple has officially launched cross-border blockchain payments in the United Arab Emirates (UAE), according to a company announcement made on May 19, 2025. This move is set to revolutionize how cross-border transactions are conducted in one of the world’s most financially connected regions, with Ripple’s XRP token at the center of the integration. The initiative will see UAE’s first fully digital bank, Zand Bank, and local fintech firm Mamo implement Ripple Payments—a blockchain-powered platform that combines stablecoins, cryptocurrency, and fiat currencies to enable near-instant and low-cost settlements for cross-border transfers. Ripple’s expansion into the UAE market comes after months of strategic groundwork. In March 2025, Ripple received a license from the Dubai Financial Services Authority (DFSA) to operate its crypto payment services in the Dubai International Financial Centre (DIFC). The company’s new “Ripple Payments” platform will serve as a bridge between traditional finance and Web3, eliminating friction points such as high fees, long settlement windows, and opacity that have long plagued international money transfers. Strategic Partnerships with Zand Bank and Mamo The selection of Zand Bank and Mamo as Ripple’s first partners in the UAE signals the tech-forward ambitions of the Emirates’ financial services sector. Zand, which operates as the UAE’s first all-digital bank, has already gained a reputation for embracing fintech innovation. Meanwhile, Mamo offers digital wallets and payment processing tools for small businesses and freelancers, a demographic often underserved by traditional banks. Both institutions will leverage Ripple’s infrastructure to power seamless cross-border transactions, particularly in a country known for its large expatriate population and high remittance volumes. The UAE’s embrace of digital assets is not limited to Ripple’s expansion. In recent years, various emirates, most notably Dubai and Abu Dhabi, have actively competed to become global crypto hubs by establishing clear regulatory frameworks and incentivizing blockchain innovation. According to a 2024 report by Chainalysis, the UAE ranks 56th out of 151 countries in overall crypto adoption. However, the country scored particularly well in DeFi participation, stablecoin usage, and altcoin trading, which are three areas closely aligned with Ripple’s offerings. In December 2024, Tether’s USDt became an accepted virtual asset in Abu Dhabi, and in early 2025, Circle’s USDC and EURC became the first stablecoins recognized under the emirate’s official crypto token regime. Moreover, the UAE is also planning the rollout of a central bank digital currency (CBDC) called the digital dirham, which could coexist with blockchain platforms like Ripple Payments and further enhance digital transaction infrastructure across the region. Outlook for XRP and Blockchain Payments in the Gulf XRP, the digital asset powering Ripple’s ecosystem, was trading around $2.37 at the time of the announcement. Analysts are watching closely to see whether increased utility via international payment flows in regions like the UAE will drive sustained demand for the token. With the potential to process billions in remittances annually from the Gulf Cooperation Council (GCC) region, Ripple’s UAE launch could serve as a bellwether for similar integrations across the Middle East, North Africa, and Asia. Furthermore, as CBDCs like the digital dirham approach deployment, Ripple’s infrastructure could become a foundational layer for interoperability between public and private digital currencies—further cementing its role in the evolving financial ecosystem. Dubai’s VARA Rolls Out Stricter Crypto Rulebooks Ahead of June 19 Deadline Meanwhile, Dubai’s Virtual Assets Regulatory Authority (VARA) has announced the release of Version 2.0 of its Rulebooks , mandating all licensed virtual asset service providers (VASPs) to comply with the updated framework by June 19, 2025. The announcement, made on May 19, signals a major effort by the emirate’s financial watchdog to raise standards for market integrity, investor protection, and risk oversight in one of the world’s fastest-growing crypto hubs. The update enhances VARA’s supervisory mechanisms across a broad array of activities, from custody, brokerage, and exchange services to margin trading and token distribution, creating what officials call a more “harmonized” and “clear” regulatory environment for crypto firms operating within Dubai. VARA’s new rules are being welcomed by industry observers as a move toward greater legal certainty in an industry long criticized for its opacity. The revised Rulebooks include refined definitions for key operational terms like “client assets,” “qualified custodians,” and “collateral requirements”, creating a consistent compliance baseline across all licensed entities. In a statement, a VARA spokesperson noted that the updates aim to minimize legal grey areas and align Dubai’s crypto rulebook with global regulatory standards. The rule updates follow VARA’s ongoing dialogue with global regulators, including those in Singapore, Hong Kong, and the European Union, to benchmark against MiCA (Markets in Crypto-Assets Regulation) and FATF (Financial Action Task Force) recommendations. Tighter Controls on Margin Trading and Leverage Risk One of the most impactful changes in Version 2.0 pertains to margin trading, a service that allows traders to amplify positions with borrowed funds. While this can multiply gains, it also introduces systemic risk in the form of rapid liquidations during market crashes. VARA has responded by tightening leverage thresholds, introducing stricter collateralisation standards, and mandating more rigorous real-time monitoring for firms offering margin trading. The goal is to curb reckless risk-taking and align Dubai’s standards with jurisdictions that are limiting crypto leverage amid rising retail participation. These controls echo policies recently enacted in the UK’s FCA and Japan’s FSA, which have also capped retail leverage to minimize exposure to high-risk products. In another notable change, VARA has introduced a new framework for token distribution, including clearer licensing prerequisites, investor protection measures, and marketing restrictions, particularly for retail-facing offers. This update responds to concerns over misleading promotions and unchecked listings of high-risk crypto tokens in the UAE, especially in Dubai’s burgeoning blockchain startup ecosystem. The new rulebook mandates that any entity conducting token distributions must now demonstrate investor suitability processes, robust whitepaper disclosures, and clearly defined marketing boundaries, including limitations on influencer-led campaigns. The spokesperson emphasized the intent to ensure that digital token launches meet the same level of due diligence and consumer protections as traditional financial securities. Enhanced Oversight Across VASP Categories The Rulebook overhaul is comprehensive, covering not only high-risk activities like margin trading and token launches, but also core VASP functions such as: Broker-dealer services Advisory and portfolio management Custody and safekeeping VA transfer and settlement Lending and borrowing of virtual assets By enhancing supervisory frameworks across these verticals, VARA aims to create regulatory symmetry that prevents firms from exploiting gaps in compliance by engaging in cross-functional roles without adequate oversight. VARA also clarified that collateral wallet arrangements must now follow updated operational protocols, offering stronger protection for segregated client assets—a measure intended to prevent commingling and mismanagement of user funds. In line with regulatory norms, VARA has provided a 30-day transition period for all licensed firms to adjust their operations and ensure full compliance with the updated Rulebooks by June 19, 2025. During this time, VARA has committed to active engagement with stakeholders through workshops, consultations, and bilateral meetings. Dubai Doubles Down on Regulatory Innovation VARA’s Rulebook 2.0 follows other recent moves by Dubai to position itself as a crypto-forward yet regulated jurisdiction. Just last month, multiple government agencies began linking the real estate registry to property tokenization frameworks, further integrating blockchain into public-sector functions.