Trading Your Own Money and Trading Someone Else's Are Different Businesses

Ownership of the capital is an input to the analysis, not the analysis. What both regimes actually test is conduct: whether the firm holds itself out, whether it quotes, whether it solicits, how regular and continuous the activity is, and whether there is a commercial element. A desk running entirely on partner capital can fail every one of those tests and still be inside a perimeter.

That is why the honest structuring answer is rarely yes or no. It is: here is which limb you are close to, here is what would move you across it, and here is which instrument you need on each side.

VARA publishes proprietary trading as something other than a licensed activity, and then attaches three separate obligations to it. It requires a No Objection Certificate from VARA, described on VARA's own page as confirming that the activity may be undertaken with regulatory oversight without a virtual-asset licence. The certificate is obtained through the commercial licensor — the appropriate zone or onshore channel or the Department of Economy and Tourism — rather than from VARA directly. And proprietary trading above a stated threshold must be registered with VARA.

Then there is the entity point, which is the one that changes a structure. VARA states that licensed VASPs are prohibited from proprietary trading, or from trading their group's portfolio of assets, under the regulated activity licence, and that a separate company must be set up for proprietary trading. That is not a conduct rule you manage with a policy. It is a company on the org chart, often requiring an onshore licence for the entity.

The rulebook version is broader than the summary. VARA's Market Conduct Rulebook prohibits VASPs from actively investing their own, or their group's, portfolio of virtual assets or any other assets. The carve-out is narrow and named: transactions for the purpose of prudent management of the net liquid assets the VASP is required to hold, or prudent management of its treasury or balance sheet, with records retained. Whether a given transaction crosses the line is at VARA's sole and absolute discretion, weighing frequency, the assets involved, volume, nature and duration, and the significance of the resulting profits to the VASP's financial condition.

Dealing as principal does not, on its own, put a Dubai business outside the licensed perimeter. VARA's Broker-Dealer Services definition expressly includes entering into virtual-asset transactions as a dealer on behalf of the entity for its own account, and separately includes making a market in virtual assets using client assets. The first limb is own-account activity sitting inside a licensed activity definition; the second is the line where a market-making model stops being a treasury question altogether. For guidance, consider consulting Velarozone's advisers.

The prohibition on trading the house book also follows the firm into products. VARA's Exchange Services Rulebook states that VASPs are prohibited from actively investing their own or their group's portfolio of virtual assets or any other assets, and adds for the avoidance of doubt that investing in exchange-traded derivatives is included in that prohibition.

So the Dubai position is not that own-account trading is unregulated. It is that own-account trading is handled by a different instrument, in a different company, and is affirmatively excluded from the licensed one.

ADGM does not publish a proprietary trading page, and the answer has to be assembled. Paragraph 4 of the Financial Services and Markets Regulations Schedule 1 specifies dealing in investments as principal, and it names virtual assets in the paragraph itself — buying or selling financial instruments, virtual assets or spot commodities as principal is a specified kind of activity. Principal dealing in virtual assets is therefore squarely in scope in principle, which is why the flat claim that proprietary trading is exempt in ADGM is an overstatement.

The first filter is that the general prohibition bites only on a regulated activity carried on by way of business, and the Regulations define that: a person carries on an activity by way of business if they engage in it in a manner which in itself constitutes carrying on a business, hold themselves out as willing and able to engage in it, or regularly solicit others to engage with them in transactions constituting it.

The second is the exclusion headed absence of holding out. A person does not carry on paragraph 4 activity by entering into a transaction relating to a security, virtual asset or spot commodity unless one of four things is true: they hold themselves out as willing, as principal, to buy or sell investments of that kind at prices determined by them generally and continuously rather than transaction by transaction; they hold themselves out as engaging in the business of buying such investments with a view to selling them; they hold themselves out as engaging in the business of underwriting; or they regularly solicit members of the public with the purpose of inducing them to enter into such transactions, and the transaction results from that solicitation.

The third is the groups and joint enterprises exclusion, which is the doorway family offices and group treasuries actually use. It excludes from principal dealing a transaction entered into with another person also acting as principal where the two are members of the same group, or are participators in a joint enterprise and the transaction is for the purposes of that enterprise. It carries parallel exclusions for managing assets belonging to another group member and for providing custody of group-owned assets, and a narrower, conditional carve-out for agency dealing that depends on not holding out and not regularly soliciting the public.

And a definitional point that saves a lot of argument: managing assets, as a specified activity, is managing on a discretionary basis assets belonging to another person. Managing your own is not within the definition at all.

The exclusions above answer whether you need a permission. They do not survive into life after one. ADGM's guidance requires a virtual-asset broker or dealer to disclose to clients whether it may carry out proprietary trading on its own account and, if so, whether it may trade against clients' positions — and states that the regulator would not allow such firms to front-run or trade ahead of clients' trades, or to trade on a proprietary basis alongside clients' trades.

If a permission is needed, the prudential shape then turns on a second distinction that is measured rather than described. The regime separates dealing as principal from dealing only as matched principal, and matched principal is a defined and testable state: the firm enters transactions as principal only to fulfil clients' orders, holds own-account positions only as a result of a failure to match those orders, keeps the market value of those positions within a stated small proportion of its tier one capital, and holds them only incidentally and for the time reasonably required. A model that internalises flow or warehouses risk does not stay inside it — and the prudential category can change as volumes change, without anything in the business plan changing.

We are deliberately describing the shape rather than the numbers. The capital floors differ by an order of magnitude across those categories, and the figure that matters to your model is the one derived from your permission set rather than the one quoted in a marketing table.

The federal framework issued on 13 April 2026 includes Dealing in Virtual Assets as Principal and Dealing in Virtual Assets as Agent among its eight activities. That is the whole of what is published about them. The operative resolution is named in the regulator's later resolutions but its text is not on the regulator's published pages, and the guidance still on the site describes a superseded regime with a different set of licences and a different vocabulary.

That is a genuine gap rather than a gap in our reading, and it should be stated as one. Anyone outside Dubai whose model sits near the principal-dealing line does not have a published definition to test themselves against yet.

What the older federal guidance does establish, and what has not been contradicted, is that client funds bring their own obligation set independent of client assets: an end-of-business-day review of each client's accounting records, settlement of client accounts no later than the end of the next business day covering shortfalls or withdrawing surplus, and notification to the regulator on the next day where reconciliation or settlement cannot be completed. The moment client fiat enters the model, a daily operational obligation starts that has nothing to do with custody of the tokens.

Dubai's registration duty for large proprietary traders is stated more than once by VARA, and not consistently. The Regulations impose it on an entity that actively invests its own portfolio in virtual assets at or above a stated value during a rolling thirty-day period. VARA's FAQ describes the same duty by reference to rolling thirty-day trading volume. Those are two different measures, and for an active book they produce materially different answers on the same set of trades. The currency and the amount also differ between the pages.

We are not going to publish either figure, because publishing a threshold whose measurement basis the regulator states two ways would be presenting a false precision. The right formulation is the honest one: cite the Regulations, note that the FAQ differs, and treat any book anywhere near the line as a question to be put to VARA through the commercial licensor before it is answered internally.

This is also why the vehicle, the certificate and the measurement methodology have to be settled together rather than in sequence. A group that sets up the trading company first and works out the measurement afterwards has fixed the harder variable before answering the easier one.

Every item on that list is a factual judgement about presentation and behaviour that the regulator makes after the fact, with stated discretion, rather than a box that can be ticked in advance. Anyone near the line needs the vehicle, the certificate and the measurement basis settled as one decision. That is a structuring conversation — talk to us before the book gets bigger, not after.