TREE NEWS update: Dubai’s Virtual Assets Regulatory Authority issued a reserve asset audit circular on October 6 setting minimum requirements for independent audits of VASPs. Firms must maintain reserves of no less than 100% of client liabilities throughout the review period, held 1:1 in the same virtual assets and reconciled daily. Audits must cover hot, warm and cold wallets, third-party wallet infrastructure and third-party custodied assets, and verify client asset segregation, wallet control and any rehypothecation, lending or other use.
Dubai VARA Requires VASPs to Hold 100% Client Liability Reserves
AI take
The notable part is scope: the circular reaches third-party wallets and custodied assets, not just a firm's own books, which pulls custody arrangements and any reuse of client assets directly into the audit perimeter. That matters for VASPs operating in Dubai and for the custody and infrastructure providers they rely on, since daily 1:1 reconciliation is an operational burden rather than a disclosure exercise. Whether firms can evidence segregation and wallet control across all wallet types, and how auditors treat rehypothecation where it exists, is the open question.
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