Nexo puts recent woes behind it with Middle East license approval

Cryptocurrency lending platform Nexo is looking to set aside its past regulatory challenges in Bulgaria and the United States after its Dubai entity received initial approval from the emirate’s Virtual Assets Regulatory Authority (VARA).

The initial approval awarded to Nexo Services FZE will be for virtual asset lending and borrowing, management and investment and broker-dealer services, according to a March 5 announcement shared with Cointelegraph via email.

The company must now navigate through the subsequent phases — obtaining a preparatory license followed by the final operating license — to fully offer those crypto services to regional clients via its mobile and web platforms.

Kalin Metodiev, co-founder and managing partner at Nexo, described the initial approval to Cointelegraph as a “stepping stone for our ongoing global expansion resulting in now seven million clients across the world.” He added:

“Throughout the years, Nexo has demonstrated remarkable growth in its client base, and the only way to achieve this is through our sustainable operations and worldwide licensing, prudent risk management, and institutional-grade security.”

Related: Dubai regulator VARA sets a crypto precedent for the world to follow

Nexo’s pivot to the United Arab Emirates follows its entanglement in the U.S., resulting in the company announcing the wind-down of its yield-bearing Earn Interest offering for its U.S. customers after it agreed to pay $45 million in penalties to the Securities and Exchange Commission and the North American Securities Administrators Association for failing to register the product.

“We are content with this unified resolution which unequivocally puts an end to all speculations around Nexo’s relations to the United States,” Nexo co-founder Antoni Trenchev told Cointelegraph, adding that they could now focus on building their financial solutions for its global customers.

Nexo also faced issues in Bulgaria that culminated in their claim for $3 billion in damages after local authorities retracted their illicit operations charges. Initially accused of orchestrating a crypto lending scheme from 2018 to 2023, the allegations were dismissed in December 2023, partly due to the country’s lack of a definitive legal framework for crypto assets.

However, the UAE — home to financial hubs Abu Dhabi and Dubai — has become a magnet for global crypto players, attracted by the jurisdiction’s regulatory clarity and clear paths to compliance.

Earlier this year, crypto exchange OKX’s Dubai subsidiary was granted a VASP license by VARA for exchange services. However, the license remains non-operational as the platform works to meet all regulatory requirements, with expectations to activate the license in the coming months.