Dubai’s Virtual Assets Regulatory Authority (VARA) announced on Wednesday that it has fined seven companies and issued cease-and-desist orders for operating without proper licenses and breaching marketing regulations. While VARA did not disclose the names of the companies, it emphasized that this serves as a public caution against engaging with unlicensed firms.
The regulator warned that interacting with such entities could lead to financial loss, reputational damage, and potential legal repercussions due to violations of regulatory guidelines.
Dubai’s VARA Imposes Fines of $13,000–$27,000 on Crypto Entities
As part of this enforcement action, VARA imposed fines ranging between AED 50,000 ($13,612) and AED 100,000 ($27,225) on each of the seven entities. The fines were determined based on the severity of each violation.
This enforcement move is notable as Dubai has positioned itself as a leading hub for crypto enterprises. The city was recently recognized as the top global destination for crypto businesses in 2024. Its appeal lies in its transparent regulatory framework, lack of capital gains tax, and affordable licensing fees.
Requirements for Issuance, Custody, and Trading of Virtual Assets
Dubai’s efforts to foster a crypto-friendly environment make this regulatory action particularly significant. Firms offering virtual asset services in or from Dubai are required to obtain a license from VARA. This applies to activities such as Virtual Asset Issuance, Trading Platforms, and Custody Services. Companies must first receive Initial Approval before they can apply for a full Virtual Asset Service Provider (VASP) license.
Entities must also meet specific regulatory conditions tailored to their operations. For instance, those providing Virtual Asset Custody Services must separate this activity from other business operations. Additionally, entities involved in proprietary trading may qualify for a No Objection Certificate (NoC) instead of a full license if they meet certain criteria.
VARA’s Stricter Marketing Regulations
As of October 1, 2024, VARA has enforced stringent marketing regulations for virtual assets. These rules apply to both Dubai-based entities and foreign companies aiming to reach Dubai’s residents. The marketing rules focus on transparency and fairness, aiming to prevent misleading information and ensure ethical practices in promoting virtual assets.
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