From derbit insights
Deribit FZE (“Deribit”) is proud to announce that it has obtained a Virtual Assets Services Provider (VASP) license from the Dubai Virtual Assets Regulatory Authority (“VARA”).
This announcement outlines the scope of Deribit’s regulatory obligations, member responsibilities, and the measures in place to monitor and enforce compliance, safeguarding market integrity and participant trust.
Regulatory Status
Deribit FZE (“Deribit”) obtained a Virtual Assets Services Provider (VASP) license from the Dubai Virtual Assets Regulatory Authority (“VARA”) to provide Exchange Services in spot virtual assets and derivatives on virtual assets.
Scope of License
Deribit’s license allows it to service all investor classifications for spot products and qualified and institutional investors for derivatives.
Regulatory Compliance
Given its regulatory status, Deribit must comply at all times with the VARA regulatory framework and other relevant laws and regulations. To achieve this goal, Deribit has internal policies and procedures to guide and support its staff.
Member Obligations
In the spirit of achieving this goal, Deribit imposes rules on the members of the exchange. Members of Deribit are required to comply with the Exchange Membership Terms and the Deribit Exchange Rulebook at all times.
Market Monitoring and Enforcement
Deribit must conduct monitoring to ensure that activities conducted on the platform are conducive to a fair and transparent marketplace. Therefore, the compliance team at Deribit will monitor for any trading activity or any behavior that may be construed as market abuse or that may breach sanctions compliance obligations.
Withdrawals from/to sanctioned wallet addresses is prohibited.
Where Deribit has a valid suspicion of market abuse or violations of sanctions, it must report the suspicion to the VARA and to the UAE Central Bank’s Financial Intelligence Unit (“UAE FIU”).
Please note that any behaviour conducive to money laundering, terrorist financing or market manipulation is not allowed on the platform. The below is a non-exchaustive list of potential market abuse and prohibited scenarios:
- Colluding/acting in concert: traders secretly cooperating or conspiring with others, typically in order to achieve an outcome that is unfair, deceptive, or illegal. It often involves coordinating actions or exchanging information behind the scenes to gain an advantage or manipulate a situation in a way that undermines honesty, competition, or established rules. Colluding can be used to evade taxes.
- Creation of a Floor or Ceiling: transactions to obstruct prices from falling below or rising above a certain level.
- Duplicate Order: placing multiple identical or nearly identical orders for the same financial instrument, price level, and side (buy or sell) in a manner that misleads other market participants. While not as commonly referenced as spoofing or layering, duplicate orders can be used as a tactic to artificially inflate the appearance of market depth or trading interest.
- Improper matched orders: occurs when colluding parties enter buy and sell orders simultaneously, at the same price and quantity, unless the transactions comply with the legitimate crossing trades rules of the trading platform.
- Layering: deceptive trading strategy where a trader places multiple non-genuine orders on one side of the order book, intending to create a false impression of market depth, liquidity, or interest. The goal is to influence other market participants into reacting to these apparent signals, thereby moving the price in a direction favorable to the manipulator’s true trading intentions.
- Momentum Ignition/Ramping: attempting to induce rapid price movements and heightened volatility in a financial instrument to exploit the resulting market reactions. This is typically achieved through a series of aggressive and well-timed orders designed to trick other participants—particularly algorithmic traders and momentum-following strategies—into jumping on what appears to be a genuine price trend.
- Order Impact: using carefully orchestrated orders to create misleading signals and influence how other market participants perceive and respond to supply, demand, and price movements.
- Phishing: using deceit to gain access to accounts or nonpublic information, thereby enabling the attacker to orchestrate trades and market signals that mislead other participants, distort pricing, and undermine fair and transparent market conditions.
- Painting the Tape: engaging in transactions to give a false impression of activity or price movement.
- Ping Orders: entering orders to trade to assess the level of hidden orders.
- Price Ramping: strategic buy/sell orders, often in rapid succession or at progressively higher/lower prices, to create an illusion of increasing demand, which can mislead other market participants.
- Pump and Dump: taking a long position, engaging in buying activity, and disseminating misleading positive information to inflate prices.
- Quote Stuffing: entering numerous orders to create uncertainty for others and camouflage one’s strategy.
- Smoking: Posting orders to attract “slow traders” and then rapidly revising terms to execute against incoming orders.
- Spoofing: manipulative trading practice where a trader places orders on an exchange with the intention of canceling them before execution. This tactic is used to create a misleading impression of market interest or liquidity, causing other participants to react to false signals. By doing so, the spoofer aims to influence price movements and then profit from those artificially induced shifts.
- Trash and Cash: taking a short position, engaging in selling activity, and disseminating misleading negative information to decrease prices.
- Wash Self Trades: transactions where the same beneficial owner effectively trades with themselves.
Investigations and Cooperation
Deribit may conduct investigations to ensure compliance with its Exchange Membership Terms and Exchange Rulebook or any applicable law or regulation, and may reach out to its members as part of the investigation. In such instances, your swift response and cooperation are appreciated to ensure no disruption to your trading privileges.
Know Your Customer (“KYC”) Obligations
Deribit must ensure it holds up-to-date KYC on its members. KYC information is collected at the initial onboarding stage and on a periodic basis thereafter. Your cooperation is crucial to ensuring a smooth onboarding process and to avoid any disruptions to your trading privileges where a refresh is in progress.
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