Starting October 1, Dubai’s Virtual Assets Regulatory Authority (VARA) will enforce new marketing rules for Virtual Asset Service Providers (VASPs). This significant development redefines how virtual asset businesses communicate their services, emphasizing transparency, ethical practices, and consumer protection.
A Framework for Compliance
The new Marketing Guidance Document provides a comprehensive framework for compliant marketing. It ensures that VASPs avoid misleading information and prioritize consumer interests. This move highlights VARA’s commitment to fostering a robust regulatory environment that protects consumers and promotes innovation.
Key Features of the Guidance
- Clarity and Transparency: Marketing materials must use precise language and avoid misleading claims.
- Disclosure Requirements: All communications must include disclaimers about the volatility and risks of virtual assets.
- Ethical Considerations: Marketing efforts should never mislead potential investors or advocate risky investment behavior.
VARA’s Mission and Objectives
VARA was established under the UAE’s federal virtual asset regulation law, aiming to:
- Position Dubai as a global hub for virtual assets and related services.
- Attract investments and encourage innovation in the virtual asset sector.
- Develop stringent regulations to protect investors and curb illegal activities.
Licensing and Compliance Essentials
VASPs must obtain an FMP (Full Market Product) license to operate in Dubai. This license requires:
- Clear company structures and defined ownership.
- Appointment of two senior individuals responsible for regulatory compliance.
- Physical presence in Dubai for conducting transactions.
Entities must also adhere to specific rulebooks based on their activities, including consulting, exchange services, and investment management.
Virtual Asset Marketing Rules
Unlicensed VASPs can market their services in Dubai, provided:
- They don’t target Dubai residents as customers.
- Marketing materials explicitly state services are unavailable to Dubai residents.
All marketing must:
- Be fair, transparent, and identifiable as promotional.
- Include disclaimers about the variability and volatility of virtual asset values.
- Avoid creating a sense of urgency or fear of missing out.
Enforcement and Monitoring
VARA will actively monitor the market to ensure network and off-chain compliance. Non-compliance may result in severe penalties, including fines, license suspension, or business closure.
Conclusion
With these new regulations, VARA aims to bring stability and structure to Dubai’s virtual asset market. Businesses must evaluate their compliance with the FMP rules and stay updated with regulatory changes to thrive in this dynamic environment.