Dubai’s VARA issues new crypto marketing regulations and guidance

Businesses wishing to market virtual assets and related activities in the UAE will now have comply with a new set of Marketing Regulations, which came into effect on 1 October 2024. 

The new rules issued by the Dubai Virtual Assets Regulatory Authority (VARA), together with the Guidance on Marketing Regulations, will apply to all businesses regardless of whether or not they are authorised by VARA to carry out Virtual Asset Activities - which are defined as those activities that require a permit from VARA and are subject to its oversight.

Therefore, firms seeking to market virtual assets in or targeting consumers in the UAE, must pay close attention to the new rules and tread carefully as failure to comply may result in significant fines up to AED 10 million. 

VARA and its crypto marketing remit 

VARA was established in the Emirate of Dubai in 2022 under the Dubai Virtual Asset Law (Law No. 4). Since its inception, VARA has been responsible for regulating, supervising, and overseeing Virtual Asset activities within the Emirate. 

Prior to the new Marketing Regulations taking effect, the marketing of Virtual Assets and Virtual Asset Activities (each as defined in Law No.4) was governed by:

• Administrative Order No.1/2022 relating to regulation of marketing, advertising and promoting related to virtual assets, and 
• Administrative Order No. 02/2022 imposing fines and penalties in the event of violation or non-compliance.

These Administrative Orders established the general principles and regulations governing the marketing of Virtual Assets (VAs) and VA Activities within the Emirate, as well as the enforcement measures for non-compliance. 

The new virtual assets marketing regime in the UAE

The Marketing Regulations have replaced both Administrative Orders and now provide the regulatory framework governing any and all marketing relating to Virtual Assets or VA Activities from within the UAE or targeting the UAE. The Regulations offer a broad definition of Marketing, expanding upon that in the Administrative Order no. 1/2022, to include “airdrops” and educational content such as articles, papers, presentations. 

Although the Marketing Regulations contain certain exemptions, which apply to journalistic and educational content, personal or private communications and “key opinion leaders” (defined by the relevant Emirate competent authorities), they remain subject to stringent rules.  

When marketing Virtual Assets and Virtual Assets services to the UAE public, entities must also take special care in making sure they comply with all applicable laws, regulations, guidelines or other rules in the UAE and the Emirate. These include advertising, data protection, and consumer protection laws, in addition to the Marketing Regulations. 

Both domestic and foreign entities, regardless of whether they are authorised and licensed by VARA, must comply with the Marketing Regulations. However, businesses aiming to market Virtual Assets in or targeting the UAE must be either a Virtual Asset Service Provider licensed by VARA, or act on behalf of and be approved by such VASP to carry out the VA Activity to which the marketing relates. 

Entities will not be required to comply with the Marketing Regulations if marketing activities are outside of the UAE. This will apply to entities which are: 

• not located the Emirate;
• do not conduct any VA Activity in the Emirate; and
• their marketing activities do not target the UAE or the UAE public. 

Entities must meet all conditions to be considered exempt from complying with the Marketing Regulations.

In line with the Virtual Assets and Related Activities Regulations 2023, the Marketing Regulations also reiterate that any VA Activity involving Anonymity-Enhanced Cryptocurrencies is strictly prohibited in the Emirate. The same prohibition extends to the marketing of Anonymity-Enhanced Cryptocurrencies in or targeting the UAE.

Scope of the Marketing Regulations 

The territorial scope of the regulations has been extended to include the UAE and not just the Emirate of Dubai. For this reason, all firms marketing Virtual Assets or VA Activity in or targeting the UAE will be caught by the new regulations. This is because VARA deems any marketing that targets the UAE to be targeting, by default, Dubai. 

In the accompanying guidance to the Marketing Regulations, VARA provides a list of factors it may consider in determining whether a campaign or any Marketing is “in or targeting the UAE”. These include elements such as location of the marketing campaign, currency and language. 

The guidance also explains that the list of factors is not exhaustive, and a marketing campaign may still be considered in-scope even if it lacks some listed elements. In order to determine whether the particular marketing falls within the scope of the Marketing Regulations, VARA will evaluate the overall context of the marketing campaign and channels. 

Marketing requirements 

Unless exempted, firms are required to comply with its general requirements, ensuring, for example, that all crypto marketing:

• be fair, clear and not misleading;
• be clearly identifiable as marketing or promotional in nature;
• not contain any inaccurate or misleading information; and
• not state or imply that investments are safe, low risk or that returns are guaranteed.

In addition, firms must:

• not include a call to buy, or other messaging seeking, instructing or directing the purchase and/or sale of the Virtual Asset;
• include a prominent disclaimer that Virtual Assets may lose their value in full or in part, and are subject to extreme volatility;
• clearly state risks investors are exposed to; and
• not involve the sending of any Virtual Asset to a VA Wallet without prior consent, or a clear expression of interest from the owner of the VA Wallet to the receipt of the Virtual Asset.

Supervision and enforcement 

Supervision and enforcement of the Marketing Regulations will be carried out by VARA in accordance with Virtual Assets and Related Activities Regulations 2023. To this regard, VARA has the discretion to issue fines against any entity that fails to comply with the new Marketing Regulations. 

The amount of the fine will depend on the nature of the violation committed as set out in Schedule 1 of the Marketing Regulations and include fines of up to AED 10 million, which could be doubled for repeated violation within one year from the date of the original violation. 

Looking ahead

The Marketing Regulations and Guidance underscore VARA’s approach to crypto regulation, aiming to balance consumer protection and innovation. The strict enforcement measures also reflect VARA's effort to establishing effective regulations to shield investors from misleading practices and foster transparent crypto market, in line with its commitment to forward Dubai’s D33 agenda.