Payward, the parent company of the U.S.-based cryptocurrency exchange Kraken, has taken a significant step toward expanding its presence in the Middle East by obtaining preliminary approval from Dubai's Virtual Assets Regulatory Authority (VARA) for a broker-dealer and investment management license. This move positions Kraken to compete in a market that has become a hub for digital asset firms seeking regulatory clarity.
The preliminary approval, granted on May 21, 2026, allows Kraken to offer services including dirham-denominated funding, spot and margin trading, over-the-counter (OTC) trading, staking, and institutional services through its Kraken Prime platform. However, these services are contingent upon receiving full regulatory clearance from VARA, which remains a conditional step before the exchange can begin operations.
Dubai has emerged as a competitive landscape for digital asset exchanges, with major players such as Binance, OKX, and Crypto.com already holding active VARA licenses. Kraken's entry, though later than some competitors, provides a regulated pathway to tap into a market where local oversight and dirham access are critical for attracting institutional capital.
Arjun Sethi, co-chief executive of Payward and Kraken, emphasized the importance of Dubai's regulatory framework in a company statement. He noted that Dubai's proactive approach to crafting crypto regulations has made it a magnet for liquidity and institutional investment. By operating under VARA, Kraken aims to serve clients through a locally supervised entity, offering the same order book, balance sheet, and multi-asset coverage available in other markets.
The approval aligns with Payward's broader strategy of building regulated local operations rather than relying solely on cross-border access. Kraken was valued at $20 billion in a November funding round that raised $800 million, with participation from investors including Jane Street, HSG, Oppenheimer Alternative Investment Management, and Tribe Capital, along with an additional $200 million from Citadel Securities.
Despite the progress, the licensing process carries inherent risks. VARA has stated that an in-principle approval is a conditional step, and applicants must not engage in virtual asset activities or serve clients until they obtain a full Virtual Asset Service Provider (VASP) license. Kraken has also indicated that its Buy, Trade, and Earn products will be introduced subject to regulatory approval.
Payward's Dubai unit, Payward FZCO, is licensed under broker-dealer and investment management categories, with the full license reference to be issued upon final approval. Retail services will be limited by VARA's retail-access rules, which are designed to protect consumers in the rapidly evolving crypto space.
VARA's public register lists 49 providers, including active licenses for competitors such as Binance FZE, OKX Middle East Fintech FZE, Foris DAX Middle East FZE, and Deribit FZE. The regulator oversees virtual assets across Dubai's mainland and free zones, excluding the Dubai International Financial Centre.
For Kraken, the practical test will hinge on execution: when dirham payment rails become operational, which products are launched first, and whether its global liquidity can attract UAE traders away from established incumbents already operating under Dubai's regulatory framework. The company's success in this market will depend on its ability to navigate local regulations and deliver a seamless trading experience.
