Dubai’s VARA Fines Seven Crypto Firms for Licensing Violations

Key Takeaways

• The penalties imposed range between $13,600 and $27,200 per company.
• Marketing materials must now include prominent disclaimers, highlighting the risks associated with virtual asset investments,

On October 9, Dubai’s Virtual Assets Regulatory Authority (VARA) announced it had issued fines and cease-and-desist orders to seven crypto businesses for violating marketing regulations and operating without proper licenses. The crypto watchdog, however, has not revealed the names of the entities.

The penalties imposed range between 50,000 dirhams ($13,600) and 100,000 dirhams ($27,200) per company. The regulator is now conducting further investigations in partnership with local authorities.

“All entities in question have been instructed to immediately cease all activities and desist from undertaking any marketing or advertising of virtual asset services,” VARA said in a statement.

In its statement, VARA issued a public warning, advising users and institutions to avoid engaging with unlicensed firms, as doing so could expose them to financial and reputational risks. The regulator reiterated that only licensed companies can offer virtual asset services within and from Dubai. VARA emphasized its commitment to protecting consumers, adding, “We will not tolerate any attempts to operate without appropriate licenses, nor will we allow unauthorized marketing of virtual asset activities.”

The regulator has introduced new marketing regulations, which came into effect on October 1, 2024. These rules govern how Virtual Asset Service Providers (VASPs) promote their services, focusing on transparency, ethical standards, and consumer protection. Marketing materials must now include prominent disclaimers, highlighting the risks associated with virtual asset investments, including potential loss of value and market volatility.

Matthew White, CEO of VARA, stressed that these regulations are aimed at fostering trust and transparency within the industry. “These rules will ensure that virtual asset providers deliver services responsibly,” he said. VARA’s updated guidance covers language use, disclosure requirements, and the ethical principles that should underpin all marketing efforts.

Dubai has been trying to position itself as a crypto hub, in recent years. The Emirate has granted full regulatory approvals to leading cryptocurrency exchanges such as Binance, OKX, and Crypto.com. Last month, Dubai’s Court of First Instance made a ruling, recognising payment of salaries in crypto under employment contracts