News Regarding Issuance of FMP License to VASPs
A rumor was making rounds in international media that the ‘FMP” license has been issued by UAE’s digital assets regulating authority to Binance.
‘Full Market Product (FMP)’, is a license that is to be granted by the Asset Regulatory Authority of UAE (VARA). It is a license made specifically by VARA for the purposes of virtual asset service providers (VASPs) i.e. crypto platforms.
Hence, the news was claiming that Binance and other firms like Binance were granted FMP licenses by VARA. However, the news turned out to be nothing but a rumor which has now been officially clarified by VARA.
VARA Clarification Backed by UAE’s Minister for Digital Economies
VARA clarified that no such FMP license has ever been issued by the authority to any VASP, let alone Binance.
The official clarification was offered by UAE’s Minister for Digital Economies namely Omar Sultan Al Olama.
Al Olama refuted that VARA ever issued any such license either to Binance or any other particular crypto trading platform in UAE.
According to Al Olama, VARA has prescribed a four-step process to be followed by VASP for the purposes of obtaining an operating license.
He also pointed out that none of the VASPs, which are interested in obtaining licenses, have so far been able to meet this criterion.
The Digital Economies Minister pointed out that in March 2022, the regulating authority did issue a few licenses to VASPs. However, none of the licenses were FMP but ‘Minimal Viable Services (MVS) instead.
He told that it was an MVS license that was sought by Binance and granted by VARA a year ago.
He also told that when Binance was issued an MVS license, the same license was also obtained by FTX as well.
Al Olama clarified that MVS is like an interim or provisional license granted to a VASP by VARA. Under this category of license, a license holder is allowed to offer services with a limited scope to selective investors/customers.
For instance, in the case of MVS, the license holder can only offer restricted cryptocurrencies to only institutional customers.
Difference between MVS and FMP
Al Olama also shed some light on the difference between FMP and MVS licenses. He clarified firstly that MVS is a basic license that VARA has been issuing to VASPs from time to time.
However, an FMP license allows a VASP to offer all of its products under the supervision of VARA. So for an FMP license, an undertaking to comply with the guidelines of VARA is a must without which there is no question of FMP.
He also clarified that an MVS license does not mean that an FMP license will be guaranteed to a VASP after a certain time.
UAE’s VARA has however noticed that several times many VASPs were found misusing the licenses.
The authority claimed that VASPs were misguiding investors by creating an impression as if they are FMP license holders. In this manner, VASPs were trying to attract more and more customers, said VARA.
The issue has now been clarified by VARA as well as by UAE’s Digital Economies Minister which leaves no iota of doubt.
It is hence clarified that no FMP license has ever been issued by Binance nor Binance has ever raised such a claim.
It has been further clarified that MVS licenses are such as that of ‘provisional’ and do not automatically mean full marketing permissions.
Furthermore, it has again been reiterated by VARA that none of the VASPs are permitted to attract every sort of customer/investor.
VARA told that MFS licenses only warrant that VARA has allowed a VASP to go through the four-step process toward FMP. It cannot be regarded as FMP which is a process to be completed separately by VASPs.
Regulatory control by VARA is the condition precedent for a VASP to apply for an FMP license, emphasized VARA.