Dubai’s Virtual Asset Regulatory Authority (“VARA”) has recently told firms involved with cryptocurrencies to require a license before they are allowed to advertise their products. As Dubai emerges as a fertile crypto hub for businesses and individuals worldwide, Dubai watchdogs are being proactive and setting strict standards for crypto activity. With the introduction of new licenses for certain crypto entities, Dubai’s crypto industry is more transparent, and users are provided with more information to make informed decisions.
Introducing VARA
The United Arab Emirates has been experimenting drastically in the digital asset industry. Many companies are establishing headquarters in Dubai and seeking to do business within the region. Due to the increased crypto enthusiasm, the UAE launched an independent agency to oversee the crypto industry—the Virtual Asset Regulatory Authority (“VARA”).
The website of Dubai’s World Trade Centre, VARA, aims to “streamline the regulatory application and operating licensing approvals for Virtual Assets including digital assets, products, operators, and exchanges.”
With a vision of becoming the “new dedicated zone for regulated Virtual Assets businesses shortly,” VARA is releasing new mandates. At the time, Prime Minister Sheikh Mohammed bin Rashid Al Maktoum observed,
Our step is a leap towards the future aimed at developing this sector and protecting all investors in it.
The goal of protecting investors is critical to the mission of VARA. Crypto scams are rampant, and to emerge as a thriving financial hub for innovation, a city needs a set of guidelines that strike the proper balance between transparency and fostering a still-nascent industry. This is Dubai’s precise plan.
Overview: The Marketing and Promotional Guidelines
Dubai’s VARA revealed a stringent set of standards and guidance focused on advertising and promotions. Entities and individuals that utilize crypto in their businesses and operate in Dubai as media sites or publishing channels must follow this guide.
These guidelines aim to ensure that individuals are provided with factually accurate information pertaining to crypto activity and the crypto industry as a whole. Another purpose is to eliminate any discrepancy or otherwise lack of transparency that may be present between individuals and entities.
Further, the guidelines aim to avoid misleading potential customers. One of the ways it will accomplish this is by requiring any promotional content to be identified and shown as such. Without these guidelines, users may be misled about the potential financial return of a project. The introduction of the policies seeks to eliminate this problem.
The Promotional Licensing Requirement
The licensing requirement is one of the essential features of the new marketing and promotional guidance. Under this licensing program, local watchdogs require that all local virtual asset service providers (“VASPs”) attain a license.
Specifically, activities under this licensing requirement include communications and advertising, building awareness; outreach; information dissemination; customer engagement; and investor solicitation—as the primary examples.
This license—called the Minimal Viable Product (“MVP”) license—addresses these activities by “safeguarding [ing] community interests.” On July 28, 2022, FTX became the first VASP to receive one of these MVP licenses from VARA to operate a virtual asset Exchange and Clearing House in Dubai.
A Marriage Between Crypto and Dubai
There are many recent examples of companies entering Dubai for the specific reason of starting crypto projects, dabbling their business in the crypto industry, or expanding their current operations with cryptocurrencies and other blockchain-related applications. Many call Dubai a crypto-friendly jurisdiction and applaud its “pro-crypto stance.”
Watchdog VARA recently granted Crypto.com a provisional license that allows it to offer crypto products and services to domestic investors in Dubai. Binance received the same temporary permit.
In addition, crypto exchange, OKX, received a provisional license awarded by the Dubai World Trade Centre Authority under VARA, according to the exchange’s official press release.
Conclusion
The crypto hype is reaching all parts of the world, making headlines now as a potential source of crypto wealth and innovation in Dubai. Watchdog VARA is responding rapidly and appropriately to the increase in crypto activities by requiring certain entities to obtain a license. In addition, VARA is setting marketing and promotional rules designed to make the industry more transparent and eliminate the possibility of misrepresentation to users. Many businesses—including online exchanges—have already been granted MVP licenses to operate in Dubai.
