Dubai’s virtual asset regulator mandates risk warnings in crypto ads

Dubai’s Virtual Asset Regulatory Authority (VARA) will require firms marketing digital assets to include a noticeable disclaimer warning potential investors about the volatility risks involved.

According to a Bloomberg report, the new rules set to come into force on October 1 mandate that any entity that advertises digital asset investments must do so while stating that virtual assets “may lose their value in full or in part and are subject to extreme volatility.”

In addition to the mandatory disclaimer, VARA has implemented further requirements for companies offering incentives related to digital assets.

Firms must now receive regulatory compliance confirmation before offering bonuses or promotions. 

This measure ensures that such incentives are not used to mislead investors or divert attention from the inherent risks of the investments.

Matthew White, VARA’s CEO, said that the new rules aim to help virtual asset service providers (VASPs) operate responsibly.

According to him, providing “clear and actionable guidance” will help build trust and transparency in Dubai’s rapidly growing crypto sector.

Dubai leads crypto innovation

Dubai is rapidly solidifying its position as a global cryptocurrency hub, aided by favorable tax policies and increasing venture capital interest.

Dubai’s Financial Services Authority recently allowed Standard Chartered to offer custody services for firms operating in the DIFC in collaboration with Brevan Howard Digital. 

According to a report by Bitget research, around 500,000 crypto traders are based in the Middle East as of 2024, with this number projected to rise to 700,000 by the year’s end.

Meanwhile, the Dubai International Financial Centre (DIFC) Innovation Hub has also played a pivotal role in advancing the city’s digital finance ecosystem.

The hub has attracted over 1,000 growth-stage companies by offering benefits like zero percent tax, full foreign ownership, and access to funding.

Recently, the DIFC announced a strategic partnership with Ripple, integrating Ripple’s XRPL to drive blockchain innovation in the United Arab Emirates, which is quickly shaping up to become a key player in the global digital asset space.

UAE regulators foster development

After establishing VARA in 2022, the nation introduced the Virtual Assets and Related Activities Regulations a year later, creating a comprehensive licensing regime for crypto service providers. 

This regulatory framework has allowed major global firms like Binance, OKX, and Bybit to operate under VARA’s oversight, reinforcing the UAE’s commitment to fostering a secure and robust crypto ecosystem.

The progressive attitude of UAE regulators did not stop there. Earlier this month, the Central Bank of the UAE approved launching the region’s first custodial risk insurance product. 

Developed by Hong Kong-based insurer OneDegree in partnership with Dubai Insurance, the “OneInfinity” product allows companies in the UAE to insure their digital assets, offering additional protection and security for businesses operating within the crypto market.

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