What is a
Net Liquid Asset (NLA)?

How is NLA calculated?

NLA is calculated as Liquid Assets less Liabilities, applying VARA-specific definitions:

• Liquid Assets — cash, qualifying bank deposits, defined high-quality liquid securities. Discounts (haircuts) apply to less-liquid categories.
• Liabilities — all current and projected obligations.
• Customer assets segregated from the licensee's own assets are typically not included in NLA.

The calculation methodology, asset eligibility and haircuts are prescribed in VARA's Compliance & Risk Rulebook and supporting guidance.

What are the category-specific thresholds?

NLA floors vary by VASP category. Custody services and exchange services typically carry higher thresholds than advisory or arranging activities. Specific thresholds are set per VARA's regulations and updated from time to time.

When is NLA calculated and reported?

NLA is reported to VARA monthly. Licensees should monitor NLA continuously and have internal triggers below the regulatory floor to enable proactive action. Material declines or breaches require immediate VARA notification.

What happens if NLA falls below threshold?

Immediate consequences include: VARA notification, submission of a remediation plan, possible restriction of activity, possible additional reporting obligations, and potential regulatory action including enforcement. Repeated or material NLA breaches are taken seriously by VARA and can trigger licence-suspension proceedings.

How can NLA be managed proactively?

Practical management techniques include: monthly NLA dashboard with internal thresholds; quarterly stress-testing against adverse scenarios; capital-raising or shareholder-funding triggers at defined internal thresholds; intra-group lending or capital-injection mechanisms; and liability-management discipline to keep current obligations within sustainable bounds.

What counts as a liquid asset for NLA purposes?

Cash, bank balances and short-term instruments readily convertible to cash, net of liabilities falling due. Own-issued tokens, restricted balances and encumbered assets do not count — deliberately, because NLA must remain available in a stress scenario.

What happens if a VASP’s NLA falls below the requirement?

The licensee must notify VARA — with an early-warning expectation as coverage approaches the threshold (the 110% pre-alert discipline) — and present a remediation plan. Operating below requirement invites supervisory action, business restrictions or licence consequences.

How often must NLA be calculated and reported?

NLA is a continuous obligation, not a year-end test. Licensees monitor it on a rolling basis, report through VARA’s periodic prudential returns and must escalate immediately when coverage deteriorates — governance should treat it like a bank treats regulatory capital.