In a significant enforcement action, Dubai’s Virtual Assets Regulatory Authority (VARA) announced on Wednesday that it has issued cease-and-desist orders and imposed fines on seven entities operating without the necessary licenses and violating marketing regulations. Although the specific names of the companies involved were not disclosed, the regulator emphasized the importance of adhering to licensing requirements, warning the public against engaging with unlicensed firms.
The fines, ranging from AED 50,000 ($13,612) to AED 100,000 ($27,225), were determined based on the severity of each entity’s violations. VARA stated that interactions with unlicensed entities expose individuals and institutions to substantial financial and reputational risks, potentially leading to legal repercussions for regulatory breaches.
Dubai has been actively cultivating a reputation as a leading global hub for cryptocurrency businesses, recently being recognized as the top destination for crypto enterprises in 2024. The city’s appeal lies in its clear regulatory framework, the absence of capital gains tax, and relatively low licensing fees. However, this latest enforcement action highlights VARA's commitment to maintaining a secure and compliant environment for virtual asset services.
Entities wishing to provide virtual asset services within or from Dubai must first obtain a license from VARA. This licensing process is essential for activities such as Virtual Asset Issuance, Trading Platforms, and Custody Services. Companies must start with an Initial Approval application before progressing to a full Virtual Asset Service Provider (VASP) license. Compliance with all regulatory requirements is mandatory, ensuring that services like Virtual Asset Custody are distinctly separated from other operations.
As part of its ongoing efforts to foster a trustworthy crypto market, VARA implemented stringent marketing rules effective October 1, 2024. These regulations apply to both local entities and foreign companies seeking to engage Dubai residents. The rules are designed to eliminate misleading advertising practices and promote transparency and fairness in marketing.
This enforcement action underscores VARA’s proactive stance in regulating Dubai’s burgeoning crypto market, emphasizing the necessity for compliance among service providers. As the city continues to attract global crypto businesses, VARA’s efforts to ensure a secure environment for all participants will be crucial in sustaining Dubai’s position as a leading crypto hub.
October 2024, Cryptoniteuae