Dubai regulator takes action against unlicensed crypto firms
The Virtual Assets Regulatory Authority (VARA), the regulatory body which oversees the digital assets market within the emirate of Dubai in the United Arab Emirates (UAE), has taken corrective action against seven unlicensed crypto entities.
Fines issued
According to an enforcement notice, published to the VARA website on October 8, the agency issued fines relative to a number of firms that it found were engaging in unlicensed virtual asset-related trading activity.
The fines ranged from between 50,000 to 100,000 UAE dirhams (AED), equivalent to between $13,600 and $27,200 in U.S. dollars. The agency outlined that it was taking this corrective action in order to continue its enforcement efforts so as to safeguard Dubai’s virtual asset ecosystem.
In its enforcement notice, the regulator did not disclose the names of the entities that have been sanctioned. The agency said that its investigations are ongoing, in partnership with local law enforcement.
A statement from the Regulatory Affairs and Enforcement division within VARA was provided, stating:
“VARA will not tolerate any attempts to operate without appropriate licenses, nor will we allow unauthorized marketing of virtual asset activities. Our marketing regulations further emphasize Dubai’s commitment to ensuring transparency and always protecting stakeholder interests.”
Cease and desist orders
In addition to fines, VARA also issued the seven firms with cease and desist orders for breaching marketing regulations. Marketing by crypto firms is an area the regulator has been focusing on recently. Last month, VARA published a press release, outlining that it had updated its crypto regulations to specifically deal with marketing-related matters.
Alongside that update, it issued a guidance document, clarifying the responsibilities of virtual asset service providers (VASPs) relative to marketing practices. A schedule of fines was provided in the case of a breach of the regulations, while the update set out a need for a mandatory disclaimer on marketing material to indicate that virtual assets are volatile and may lose their value, fully or partially.
The Dubai regulator is not the first to home in on the marketing activities of crypto businesses. In the UK, the Financial Conduct Authority (FCA) enforced additional rules related to crypto marketing in late 2023. Some crypto businesses found the requirements too arduous and left the UK market as a direct consequence.
Public warning
In its enforcement notice, the Dubai regulator also had a message for the trading and investing public, stating:
“This public warning is VARA’s market notice to all to avoid engaging with any unlicensed firms.” The regulator added that interacting with unlicensed entities exposes both individual investors and institutions to both financial and reputational risk.
Furthermore, it warned of “potential legal consequences” for regulatory violations. “Only firms licensed by VARA are authorised to provide virtual asset services in/from Dubai, and the Authority remains steadfast in its commitment to protect consumers and investors, and to preserve market integrity,” the regulator further asserted.
