Dubai’s Virtual Assets Regulatory Authority (VARA) recently fined several cryptocurrency firms following new legal changes. In addition to the fines, VARA issued cease and desist orders, barring these companies from operating within the trade zone.
As a regulatory body, VARA plays a crucial role in overseeing the cryptocurrency sector across the United Arab Emirates (UAE).
Dubai’s VARA Punishes Seven Crypto Firms for Breaching Market Regulations
Dubai’s Virtual Assets Regulatory Authority fined seven cryptocurrency firms for violating marketing rules and operating without the necessary licenses. Along with the fines, VARA issued cease-and-desist orders but did not reveal the names of the entities involved.
“All entities in question have been instructed to immediately cease all activities and desist from undertaking any marketing or advertising of virtual asset services,” a paragraph in the statement read.
Fines ranged from 50,000 dirhams ($13,600) to 100,000 dirhams. This enforcement raised eyebrows, given the UAE’s typically crypto-friendly environment, which includes exemptions from value-added tax (VAT) on crypto transactions.
Read more: Crypto Regulation: What Are the Benefits and Drawbacks?
The crackdown follows new marketing regulations and guidance issued by VARA in late September 2024. These rules, effective as of last week, apply to all virtual asset advertisements, offers, or promotions within or targeting the UAE. The regulations affect both local and foreign entities, regardless of their authorization status from VARA.
VARA’s New Regulations on Marketing of Virtual Assets and Related Activities
Dubai’s VARA’s new legal changes demand full compliance with the regulator’s marketing regulations. One core requirement is that all crypto-related marketing targeting the UAE must only be carried out by VASPs (virtual asset service providers) licensed by VARA.
Non-compliance carries severe penalties, with fines reaching up to AED 10 million (EUR 2.5 million) per violation. The regulations also include several exemptions, such as a journalist exemption, provided certain conditions are met.
Although marketing regulations extend beyond the UAE, entities that do not target or operate in the UAE are exempt. However, marketing conducted from Dubai in other regions must comply with both UAE and international laws. VARA can collaborate with other jurisdictions on violations.
“Targeting the UAE” is defined broadly, factoring in the campaign’s content, use of local currency, and UAE-specific language or personalities. The regulations apply across all media types and require marketing materials to be fair, clear, and not misleading. Entities must keep compliance records for eight years.
Read more: How Does Regulation Impact Crypto Marketing? A Complete Guide
Finally, certain exemptions apply to journalistic content, educational materials, and personal communications. However, these must meet strict criteria to avoid being classified as marketing. Importantly, key opinion leaders (KOLs) do not qualify for these exemptions.
These regulatory updates are part of Dubai’s ongoing efforts to balance crypto innovation with consumer protection. They come as the region strengthens its position as a global hub for blockchain and digital assets. The new rules aim to safeguard retail and institutional investors from misleading content.
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