Nomura Holdings' digital asset subsidiary, Laser Digital, has become the first company to obtain a license under the Dubai Virtual Assets Regulatory Authority (VARA) pilot framework to offer regulated OTC crypto options.
This 'limited license' allows Laser Digital to provide OTC crypto options to institutional clients under strict supervision. The OTC platform enables institutions to conduct large digital asset trades directly with counterparties, reducing slippage and achieving more flexible pricing, typically used by hedge funds, asset management companies, and other high-volume clients.
Laser Digital's plan leverages Dubai's demand for regulated crypto derivatives, providing hedging, yield generation, and volatility management tools, while regulators assess market readiness and risk control.
Global regulation of OTC crypto options is still in its early stages.
Currently, Dubai and the UK are at the forefront of OTC crypto options platform regulation. In December 2023, the UK's pension giant M&G's investment division invested $20 million in the country's first regulated Bitcoin derivatives exchange, GFO-X.
Most European countries have not introduced specific OTC crypto licenses, while the US allows some institutional crypto derivatives trading under existing laws but does not have a dedicated OTC options framework. In contrast, Dubai launched a comprehensive crypto regulatory framework covering exchanges, custodians, brokers, and token issuers in early 2023.
The UAE is expanding the derivatives market through digital assets.
Although the UAE's derivatives market is relatively small, recent developments show a steady growth and diversification trend. The current market valuation is approximately $167 million, with an expected annual growth rate of 3.7% by 2031.
Traditional platforms such as the Dubai Gold and Commodities Exchange (DGCX) and OTC service providers like ADSS have long served the region's commodities and forex markets. Now, the UAE is expanding into the realm of digital assets and institutional financial products, creating advantages for emerging asset classes like cryptocurrencies by providing clear regulatory frameworks.
