Nomura’s digital asset arm, Laser Digital, has achieved a significant milestone, becoming the inaugural entity to receive a license under Dubai’s Virtual Asset Regulatory Authority (VARA) pilot program, authorizing it to provide regulated over-the-counter (OTC) crypto options.
This “limited license” empowers Laser Digital to extend OTC crypto options services to institutional clientele, operating under stringent regulatory supervision, as the company announced on Wednesday.
OTC desks facilitate direct, large-volume digital asset trading between institutions and counterparties, thereby minimizing slippage and enabling customized pricing arrangements. These services are commonly utilized by hedge funds, asset management firms, trading houses, and other institutional investors engaged in high-volume transactions.
This strategic move positions Laser Digital advantageously to capitalize on Dubai’s growing demand for regulated crypto derivatives. The company intends to provide tools for hedging, income generation, and volatility management. Regulators will evaluate the market’s preparedness and existing risk management protocols before allowing a wider rollout of these services.
Related: A Guide to Legally and Securely Purchasing Property in Dubai with Cryptocurrency
Global regulatory framework for OTC crypto options is still in its nascent stage
While still limited, the number of jurisdictions establishing rules for OTC crypto options desks is expanding, with Dubai and the United Kingdom taking pioneering roles.
In December of the prior year, M&G, the investment division of a major UK pension provider, invested $20 million in GFO-X, the UK’s first regulated exchange for Bitcoin derivatives.
This funding formed a part of a $30 million Series B round, designed to facilitate the launch of a platform, overseen by the Financial Conduct Authority (FCA), for centrally cleared Bitcoin index futures and options.
Across the European Union, crypto derivatives are subject to wider financial regulations, such as MiFID II and EMIR, which include stipulations for reporting and clearing. However, most EU countries haven’t yet put into place specific licensing processes for crypto-related OTC operations.
Within the United States, the CFTC permits select institutional trading of crypto derivatives under current statutes. However, there isn’t a designated licensing structure for OTC crypto options trading platforms.
In contrast, Dubai introduced its extensive crypto regulatory framework during the early months of 2023, establishing rulebooks that govern exchanges, custodians, broker-dealers, and token issuers under the purview of VARA.
Related: The Reasons Behind the Crypto Millionaire Migration to the UAE
The UAE’s growing ambitions in derivatives extend to digital assets
The derivatives market of the United Arab Emirates is comparatively small next to the US; however, recent activity reveals a trajectory of consistent growth and increased diversification. The market was estimated at approximately $167 million in 2024, projecting an annual growth of 3.7% through the year 2031.
Conventional venues like the Dubai Gold & Commodities Exchange (DGCX) in addition to OTC providers like ADSS have long serviced the commodities and foreign exchange needs of the region. The UAE is expanding its horizons to incorporate digital assets and institutional investment offerings.
While the United States still leads the global derivatives sector via exchanges like CME and CBOE, the UAE is distinguishing itself by providing a transparent regulatory environment for burgeoning asset categories like cryptocurrency.