The Middle East has become one of the most closely watched regions for crypto exchange expansion.
Dubai’s VARA (Virtual Assets Regulatory Authority) licensing regime, in particular, has attracted strong industry attention as major exchanges look for regulated footholds in the UAE. For many operators, it is now one of the first jurisdictions that comes up in any serious licensing roadmap discussion.
However, visibility alone is not a sufficient basis for choosing a licensing jurisdiction. Exchanges should assess whether VARA, ADGM, or Bahrain best matches their customer base, service model, operating structure, compliance capacity, and long-term regional strategy.
A crypto license is not just a market-access credential. It shapes how the business will operate, who it can serve, what infrastructure it needs, what counterparties it can work with, and what standards it must continue to meet after approval.
Middle East licensing should therefore be treated less as a jurisdiction-shopping exercise, and more as an operating model decision.
Disclaimer: This article is adapted from CoinGecko’s webinar, Global Expansion Playbook for Exchanges: Where to Get Licensed Next & Common Bottlenecks. It is intended for general informational purposes only and should not be considered legal, regulatory, or compliance advice. Exchanges should seek qualified legal counsel for jurisdiction-specific guidance.
Licensing Starts with the Business Model
When exchanges evaluate where to get licensed next, the discussion often begins with geography, market access, and competitor activity. These are important inputs, but they are not sufficient on their own.
A licensing decision should begin with the exchange’s operating model. This includes the customer segment it intends to serve, the services it plans to offer, the entity structure it will use, the level of local presence it can support, and the counterparties it expects to work with.
A retail exchange, an institutional brokerage, a custody provider, an OTC desk, and a trading venue serving regulated counterparties may all evaluate the Middle East differently. Each model creates different regulatory, operational, and commercial requirements.
The right jurisdiction is therefore not always the most visible one, but the one that best supports the business the exchange is trying to build.
This distinction is important because licensing is not limited to approval. Once a license is granted, the exchange must continue operating under the regime’s governance, compliance, reporting, and operational expectations. Exchanges should therefore assess whether they can sustain the obligations attached to the license, rather than focus only on whether they can obtain it.
VARA, ADGM, or Bahrain: Which Licensing Regime Fits Your Business Model?
Each regime supports different business models. The right choice is the one that matches your Exchange's operating model, from customer base, service scope to counterparties.
VARA Crypto License: When It's the Right Fit
The VARA license has become one of the most prominent crypto regulatory regimes in the Middle East, with its appeal understandable. Dubai has positioned itself as a digital assets hub, and VARA provides a dedicated regulatory framework for virtual asset service providers.
However, exchanges should evaluate VARA based on business fit rather than market visibility.
VARA operates through an activity-based framework. This means exchanges need to understand how their services map to specific regulated activities, such as exchange services, broker-dealer services, custody, advisory, management, or investment services. The more complex the product suite, the more important this mapping becomes.
For example, an exchange offering spot trading, custody, staking, earn products, launchpads, institutional execution, and advisory-like services may need to assess whether these activities sit within one licensing scope or require additional permissions, controls, or operational separation.
VARA may be particularly relevant for companies that can clearly define their activities and are building a Dubai-centered operating presence. It may also be suitable for firms with a retail or B2C focus, especially where the business model aligns with VARA’s activity-based structure.
Before applying, exchanges should assess whether they can support the obligations attached to the relevant activity categories. This includes governance, compliance resources, operational processes, reporting obligations, and the infrastructure needed to run the licensed activities on an ongoing basis.
ADGM Crypto License: When It May Be More Suitable
The ADGM (Abu Dhabi Global Market) crypto license should be evaluated separately from VARA, rather than treated as a direct substitute.
For some firms, ADGM’s relevance lies in its common law framework and broader financial services environment. This can be important for exchanges and crypto businesses that work with institutional clients, professional investors, OTC desks, regulated counterparties, or traditional finance partners.
In these contexts, licensing is not only about access to end users. It is also about the level of comfort the regime provides to counterparties, banks, payment partners, and internal risk teams.
Institutional clients may place significant weight on legal familiarity, contracting standards, governance expectations, and the broader financial regulatory environment. For exchanges pursuing institutional flows or regulated counterparty relationships, these considerations may be as important as the crypto-specific licensing framework itself.
ADGM may therefore be more relevant for firms whose growth depends on institutional credibility, professional investor access, execution services, OTC activity, or broader financial services alignment.
The practical implication is that exchanges should assess the type of trust they need to establish. A retail-focused exchange may prioritize brand visibility and customer access. An institutional venue may prioritize counterparty confidence, legal familiarity, and alignment with traditional financial services expectations.
Bahrain Crypto License: Where It May Fit
Bahrain should also be considered on its own terms—while it may not have the same visibility as Dubai, but it can be relevant for firms with different strategic priorities.
As one of the earlier Middle East regimes, Bahrain has a potentially lower cost of entry and relevance for firms beginning their regional licensing journey. This may matter for exchanges that are earlier in their regulatory roadmap, more cost-sensitive, or seeking a regional entry point before committing to a larger operating footprint.
Bahrain may also be relevant where Sharia law alignment is important to the firm’s target customers, products, or financial services positioning. This will not apply to every exchange, but it may be a meaningful consideration for businesses serving specific customer segments or counterparties in the region.
Comparing the Relative Cost of Entry Across VARA, ADGM and Bahrain
While cost is rarely the only factor in a licensing decision, it is often the first question a management team asks.
Across VARA, ADGM, and Bahrain, cost of entry is shaped by several components rather than a single license fee: application and licensing fees, minimum capital requirements, the cost of establishing local substance (office space, licensed personnel, governance infrastructure), and the ongoing cost of compliance once licensed.
VARA's cost profile tends to reflect the breadth of its activity-based framework. Firms with a wider service mix, from spot trading, custody, staking, to advisory-like services, which may face a higher combined cost of entry than firms applying for a single, narrowly defined activity.
ADGM's cost profile is often tied to its institutional and common law positioning. Firms building for institutional counterparties may find that the cost of meeting counterparty and governance expectations is comparable to, or exceeds, the direct licensing cost itself.
Bahrain is generally positioned as a lower-cost regional entry point relative to Dubai, which may make it more relevant for firms earlier in their licensing journey or operating with a leaner regional footprint.
Regardless, these are directional comparisons, not fixed figures. Actual costs shift with regulatory updates, activity scope, and firm-specific structuring, so exchanges should confirm current fee schedules and capital requirements directly with each regulator or with qualified local counsel before budgeting a licensing roadmap.
A Practical Framework for Evaluating the Middle East Path
A practical licensing review should evaluate VARA, ADGM, and Bahrain across several dimensions:
- Customer Profile: Exchanges should clarify whether their priority is retail users, institutional clients, professional investors, high-net-worth individuals, regulated counterparties, or a combination of these groups.
- Service Scope: Firms should map their actual and planned activities against the relevant regulatory framework. This is especially important for exchanges with multiple business lines, such as trading, custody, brokerage, advisory, staking, earn products, derivatives exposure, or institutional execution.
- Operating Presence: Exchanges should assess whether they can maintain the necessary personnel, governance, decision-making, compliance resources, and local substance required by the regime.
- Counterparty Strategy: Exchanges should consider which jurisdiction is most likely to support banking relationships, payment rails, liquidity partnerships, listing partners, institutional relationships, and broader financial services integrations.
- Infrastructure Readiness: Firms should evaluate whether their systems can support regulated operations, including market data methodology, operational resilience, reporting, audit trails, surveillance, and historical reconstruction.
In other words, this framework helps exchanges avoid treating licensing as a branding exercise or a race to approval.
Five Dimensions to Consider When Selecting a Jurisdiction
Each license is an operating-model decision. Work through these five dimensions before optimising for speed, cost, or the odds of approval.
Choosing the Jurisdiction that Matches Your Business Model
VARA, ADGM, and Bahrain should not be evaluated as interchangeable licensing options. Each regime may support a different customer profile, operating model, compliance burden, and regional strategy.
In sum, the VARA crypto license may be relevant for firms seeking a Dubai presence and an activity-based virtual asset framework, particularly where the business has a clearly defined service model and a retail or B2C orientation. ADGM may be more suitable for firms prioritizing institutional counterparties, common law familiarity, professional investor access, OTC activity, or broader financial services alignment. Bahrain may be relevant for firms seeking a different regional entry point, a potentially lower cost base, or alignment with customer segments where Sharia considerations are commercially important.
The appropriate choice depends on the business the exchange intends to operate, not only the jurisdiction it wants to enter.
A license may provide market access, but the sustainability of that access depends on whether the exchange can operate under the regime’s ongoing governance, compliance, counterparty, and infrastructure expectations. For exchanges evaluating the Middle East, the licensing roadmap should therefore begin with a clear assessment of business fit, operating readiness, and long-term regulatory defensibility.
Market Data as Part of Licensing Readiness
While jurisdiction selection is the first step, exchanges also need to consider whether their operating infrastructure can support the standards expected after approval.
For regulated exchange operations, market data is not used only for price display. It can support trading, settlement, reconciliation, portfolio valuation, surveillance, reporting, and historical reviews. These workflows may be reviewed not only by regulators, but also by banks, payment providers, auditors, and institutional counterparties.
This makes data defensibility an important part of licensing readiness. Exchanges should be able to explain where their pricing data comes from, how it is validated, how historical data can be reconstructed, and how pricing methodologies support customer-facing and risk-sensitive workflows.
For exchanges evaluating VARA, ADGM, Bahrain, or other licensing paths, the broader question is therefore not only which jurisdiction best fits the business model, but whether the exchange has the infrastructure to operate credibly once licensed.
Need Defensible Market Data for Regulated Exchange Operations? Book a Data Consultation Today
As regulatory expectations rise, exchanges need market data infrastructure that is reliable, auditable, and defensible. Speak with CoinGecko’s API team to explore how our data can support your pricing, reporting, and compliance workflows.
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