Virtual Asset Standards

This Virtual Asset Standards is published pursuant to Rule VIII of the VARA Market Conduct Rulebook the (“MCR”).

1. Introduction

This document sets out the standards and criteria applied by Rain MENA FZE (the "Company") in the assessment, approval, and ongoing monitoring of the Virtual Assets ("VAs") it lists and provides VA Activities in relation to.

The Company publishes its VA Standards on its website so that clients and other interested parties can understand how listing decisions are made and what standards apply to all Virtual Assets available through the Company's platform.

2. Scope

These VA Standards apply to each VA the Company intends to list on its Virtual Asset Platform under the licenses issued to it by VARA to perform the following VA Activities: 

• Broker-Dealer Services; and
• Exchange Services.

The issuance of Anonymity-Enhanced Cryptocurrencies and all VA Activity(ies) related to them are prohibited in the Emirate of Dubai. Accordingly, no VA exhibiting anonymity-enhancing features that prevent the tracing of transactions or records of ownership, and for which the Company has no mitigating technologies or mechanisms to allow traceability or identification of ownership, will be listed or supported under any circumstances.

3. Regulatory Framework

These VA Standards are informed by the following: 

• Dubai Law No. 4 of 2022 Regulating Virtual Assets in the Emirate of Dubai (the "Dubai VA Law");
• Virtual Assets and Related Activities Regulations 2023 (the "VARA Regulations");
• VARA Company Rulebook;
• VARA Compliance and Risk Management Rulebook;
• VARA Technology and Information Rulebook;
• VARA Market Conduct Rulebook;
• VARA Exchange Services Rulebook; and
• VARA Broker-Dealer Services Rulebook.

4. Governance

The Company maintains a robust governance structure for assessment, decision-making, record-keeping, and periodic review, proportionate to the scale and complexity of its operations to ensure compliant oversight of VA listing decisions. This governance framework includes:

• defining who is responsible for conducting assessments and decision-making in respect of VAs;
• periodic reviews of the VA Standards and their contents; and
• maintaining comprehensive records of initial and ongoing assessments, VARA notifications, and disclosures to customers.

Once completed, each pre-listing assessment is reviewed by the Company's General Manager, Head of Risk, and Compliance Officer, who must satisfy themselves that the relevant VA can be listed.

5. Assessment Criteria

Prior to listing a VA, the Company completes a comprehensive and risk-based assessment, which captures the Company's VA Standards, taking the following factors into account. All criteria are applied to the extent relevant to the nature and type of the Virtual Asset under review.

5.1 Market Metrics

The Company assesses the market capitalization, fully diluted value, and liquidity of the proposed VA, as well as trends over time that indicate stability or downward movement.

In particular, the Company considers:

• Whether market capitalization, fully diluted value, and liquidity metrics have trended downward over time in a manner indicative of structural weakness or declining market confidence; and
• Whether the VA's liquidity profile is sufficient to support the VA Activities the Company proposes to provide in relation to it.

5.2 Design, Use Case, and Features

The Company assesses the purpose, technical design, actual and intended utility, and target users of the VA; the existence of clear use cases and demonstrable utility whether or not such use cases were intended by the Issuer or relevant developers; and whether features may affect compliance with applicable laws, including those relating to AML/CFT, sanctions, securities regulation, and intellectual property.

The Company also considers whether the VA has been designed or is predominantly used in a manner that is inconsistent with its legal and regulatory obligations. This assessment extends to any emergent or unintended use cases that have developed in practice, regardless of the Issuer's or relevant developers' stated intentions.

5.3 Legal and Regulatory Compliance

The Company assesses the status of the VA under the laws of the UAE, VARA, and other relevant jurisdictions; whether the VA is explicitly prohibited or restricted; regulatory approvals received (if any); and whether the VA includes anonymity-enhancing features or is predominantly used for illicit activity.

The Company's assessment specifically addresses the following questions:

• Does the proposed VA have any built-in anonymization functions?
• Does the proposed VA have any token/coin-specific mixing services available?
• Does the current blockchain analysis tool cater to monitoring this specific VA? Is the Company able to demonstrate the origin and destination of the specific VA when a transaction takes place, including through multiple transactions?
• Can transactions in the VA be adequately monitored? Does the VA enable the identification of the counterparties in each transaction?
• Are the prospective customers of the proposed VA subject to the existing controls in place, including Name Screening, Enhanced Due Diligence (where applicable), and Transaction Monitoring?
• Is the proposed VA popular within the dark net or smurfing technology for transaction purposes?
• Does the offering impact the Company's ability to comply with FATF guidelines?
• Does the proposed VA facilitate or may facilitate the obfuscation or concealment of the identity of a customer or counterparty?
• Is the proposed VA a privacy coin or VA that is designed to or substantially used to circumvent laws and regulations?
• Is there a public block explorer for the proposed VA?

The Company also considers any legal risks associated with the proposed VA, including any pending or potential civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of the new VA.

5.4 Security and Protocol Resilience

The Company assesses the underlying DLT protocol's security, immutability, and vulnerability history; any smart contract audits, technical due diligence, or protocol risk assessments conducted; and the likelihood of attacks or performance issues, including transaction backlogs.

The Company's security assessment specifically addresses:

• A brief on the issuer's cybersecurity systems and controls in place;
• Any risks associated with technology or systems enhancement or modification requirements necessary to ensure timely adoption or listing of the new VA;
• Whether the proposed VA is able to withstand, adapt, and respond to cybersecurity vulnerabilities, including size, testing, and maturity;
• Whether the VA allows the ability to appropriately safeguard secure private keys; and
• Risks relating to code defects, breaches, and other threats concerning the proposed VA and its supporting blockchain, or the practices or protocols that apply to them.

The Company also assesses the VA's DLT infrastructure, including:

• Whether the proposed VA is an independent separate blockchain with a new architecture system or network, or whether it leverages an existing blockchain for synergies and network effects;
• Whether the proposed VA protocol has scaling capabilities;
• What the relevant consensus mechanism of the protocol is (Proof-of-Work, Proof-of-Stake, etc.); and
• Whether there are any issues relating to the security and/or usability of the distributed ledger technology used for the purposes of the VA.

5.5 Issuer Due Diligence

The Company assesses the identity and background of the issuer or development team; the legal entity status, KYC, and ownership structure; history of regulatory actions, fraud, or adverse media; the issuer's AML/KYC compliance commitment; and the business model, white paper, board composition, and financial standing.

The Company's issuer due diligence specifically addresses:

• The background of the VA issuer, including technological experience, track record, and reputation of the issuer and development team;
• Any risks of potential non-compliance with VARA regulations upon listing or maintaining the VA; and
• Any direct or indirect involvement of the Company or its personnel with the VASP.

The Company also considers the core use cases of the VA and how these are being utilized in real-world applications by users, developers, or businesses, and whether the actual functionality of the VA aligns with claims made by its issuer or developer community in public-facing documentation, including whitepapers, websites, and marketing materials.

5.6 Roadmap and Future Development

The Company assesses the issuer's or developers' roadmap (if any), as well as their communication with token holders about updates or protocol changes.

The Company reviews the issuer's or developers' roadmap for upcoming updates or protocol changes and evaluates the credibility of any disclosed development timeline and whether disclosed milestones are consistent with the VA's technical infrastructure and team capacity.

5.7 Market Profile and Risk of Market Manipulation

The Company assesses any historical or structural susceptibility to price manipulation; team or holder concentration, wash trading, or synthetic volume; and what internal or third-party monitoring measures are available. Where any susceptibility to price manipulation is identified, the Company's pre-listing assessment will specify the particular mitigations that the Company will implement in respect of that Virtual Asset prior to or upon listing.

The Company's market profile assessment specifically addresses:

• Whether liquidity for the VA is sufficiently available to ensure continued offering;
• Which liquidity provider will be used to offer this VA;
• What other global exchanges the proposed VA is traded on;
• What trading pairs are available for the VA;
• The wallet allocation and geographical distribution of the VA;
• Whether the proposed VA's holdings are concentrated or controlled by a small number of individuals or entities;
• Whether the proposed VA is highly volatile; and
• Any price manipulation or fraud risks associated with the proposed VA, together with the specific mitigations the Company will implement to address such risks, which may include (without limitation): enhanced real-time transaction monitoring; volume and price movement thresholds and alerts; restrictions on order types or trading pairs; enhanced surveillance during the initial listing period; coordination with third-party blockchain analytics providers; and/or imposition of position or concentration limits.

The Company also considers whether the proposed VA is currently listed on any regulated exchanges and, if so, whether the listing exchange(s) provide sufficient liquidity and robust market surveillance mechanisms to detect and prevent market abuse for this VA. The Company also considers whether any exchanges have delisted the VA in the past 12 months and, if yes, the reasons cited for delisting.

The Company is mindful of its obligations under VARA's requirement that VASPs establish and maintain effective arrangements, systems, and procedures aimed at preventing and detecting Market Offences or attempted Market Offences. Accordingly, where price manipulation risks are identified in respect of a specific Virtual Asset, the Company will document in its pre-listing assessment the VA-specific mitigations it commits to implement and will keep those mitigations under review as part of its ongoing assessment obligations under Section 7 of these VA Standards.

5.8 Conflicts of Interest

The Company assesses any direct or indirect involvement of the Company or its personnel in the VA, and the measures available to mitigate and disclose conflicts.

Where a conflict of interest is identified in connection with any VA listing decision, the Company will apply the management measures set out in its public Conflicts of Interest Disclosure, available here.

5.9 Asset Representation and Enforceability of Rights

Where a VA represents rights to other assets, such as real-world assets or airdrops of other VAs, the Company verifies the legal enforceability of such rights and assesses the backing asset sufficiency and structure.

The Company also considers whether sufficient assets are available to satisfy any obligation arising in connection with the VA Activities it proposes to provide in relation to the Virtual Asset.

5.10 Physical Market Impact and Terms Alignment

The Company assesses whether the VA tracks, mimics, or relies on an existing physical market, and whether VA Activities in relation to it may distort or disrupt that physical market.

The VA's Terms and Conditions must: reflect the relevant market structure; avoid adverse impact on the physical market; and be reviewed and updated periodically.

The Company will not list or continue to support any Virtual Asset whose terms and conditions are materially inconsistent with the relevant underlying physical market structure.

5.11 Transparency and Information

The Company assesses whether the VA's public disclosures on token name, ticker, supply, and specifications are accurate; whether there are ongoing updates to users about material changes; and whether the VA's information practices align with the UAE Personal Data Protection Law ("PDPL") and fair disclosure principles.

5.12 Custody Arrangements and Operational Capacity

The Company assesses:

• The ability of the Company's custody arrangement to provide custody service for the VA;
• Any resulting demands on the Company's resources, infrastructure, personnel, and operational capacity for continued customer onboarding and customer support;
• Whether customers have other means of storing the proposed VA other than maintaining them on the Company's platform after purchase, including hot wallets and cold wallets; and
• The availability of a reliable multi-signature hardware wallet solution for the VA.

6. Approval Process

Once a pre-listing assessment has been completed, it is reviewed by the Company's Senior Executive Officer, Head of Risk, and Compliance Officer, who must satisfy themselves that the relevant VA can be listed.

All listing decisions are documented with a detailed rationale and retained in accordance with Section 8 of these VA Standards.

7. Ongoing Assessment

The Company will reassess every VA on its Virtual Asset Platform annually, or more regularly as determined by internal risk assessments or material developments triggered by:

• major changes in protocol or issuer status;
• regulatory actions; and/or
• client complaints or adverse events.

8. Suspension or Delisting

If on reassessment a VA no longer meets these VA Standards, the Company will act within a reasonable timeframe to minimize client impact: 

• suspending support;
• notifying VARA; and
• retain records which may be shared with VARA upon request.

Clients who hold a delisted or suspended VA will be notified via email and / or platform notification and will be provided with guidance on how to manage their holdings during any transition period.

9. Currently Listed Virtual Assets

The Company maintains on its website an up-to-date list of all Virtual Assets used in connection with its regulated VA Activities, in accordance with these VA Standards. This list contains the following information for each listed VA:

• Name and Symbol of the VA
• Blockchain or network on which the VA operates
• Contract or Token Address (if applicable)
• Any relevant usage or trading restrictions

Where relevant, the Company may also include a link to disclosures required under these VA Standards on the same webpage.

The additional per-VA data points required under the VARA Exchange Services Rulebook and VARA Broker-Dealer Services Rulebook, including market capitalization, fully diluted value, circulating supply, smart contract audit status, and price history data, will be published on activation of live services.

10. Record Keeping

The Company will maintain an accurate record of the following items in respect of each VA it lists for a minimum period of eight (8) years: 

• pre-listing and subsequent periodic ongoing assessments;
• internal approvals;
• notifications submitted to VARA;
• correspondence with VARA; and
• published VA lists.

All records will be made available to VARA upon request.

11. Amendments to These VA Standards

These VA Standards will be reviewed annually, or sooner where regulatory changes, VARA guidance, or material internal developments necessitate amendment.

Any updates to these VA Standards will be published on the Company's website. Where appropriate, clients will be notified via email or platform alerts.

Note:_ The VARA Regulations confirm that VASPs shall comply with any and all licensing conditions as communicated by VARA in its Licence or otherwise from time to time, which shall include but not be limited to compliance with all Regulations, Rules, and Directives. These VA Standards form part of the Company's compliance framework and are subject to variation if VARA issues new Rules, Directives, or Guidance applicable to the assessment of Virtual Assets._

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