UAE Crypto Firms Must Add Risk Disclaimer Under New VARA Regulations Starting Oct. 1

• VARA’s new rule mandates a clear disclaimer stating that virtual assets may lose value and are subject to extreme volatility starting October 1.
• Companies offering bonuses or incentives tied to virtual assets must prove compliance, ensuring bonuses do not mislead or obscure risk evaluation.
• Dubai’s crypto-friendly environment continues to grow with the legal recognition of cryptocurrency payments and the establishment of RAK Digital Assets Oasis.

The United Arab Emirates’ Virtual Assets Regulatory Authority (VARA) has introduced new rules requiring crypto firms to add disclaimers warning potential investors about the risks of digital assets. The updated regulation, which will take effect on October 1, aims to increase transparency and investor awareness in the fast-evolving crypto market.

Under the new guidelines, all companies marketing virtual assets in the UAE must clearly state that virtual assets may lose value in full or in part and are subject to extreme volatility. This disclaimer is part of VARA’s effort to ensure that consumers are fully informed of the potential risks before investing in these highly speculative assets.

Updated Marketing Compliance

Additionally, firms offering incentives or bonuses related to digital assets are required to obtain compliance confirmation from VARA. This confirmation must prove that any offered bonus will not mislead or divert investors from accurately assessing the risks associated with the investment. Companies failing to meet these standards may face penalties or restrictions.

VARA’s Chief Executive Officer, Matthew White, emphasized that the new guidelines aim to build trust and transparency within the virtual asset sector. White believes that by providing clear, actionable guidance, service providers can foster a more secure environment for investors, benefiting both businesses and consumers.

Dubai’s Crypto-Friendly Ecosystem

Dubai has emerged as a global hub for cryptocurrency and blockchain technology due to its favorable tax regulations and growing investment opportunities. The city’s crypto-friendly environment has drawn many crypto firms looking to expand their operations. In 2024, an estimated 500,000 crypto traders are active across the Middle East, a figure expected to rise to 700,000 by year’s end.

Strengthening Regulation in the Region

In recent months, Dubai’s regulatory approach has gained further momentum. A landmark court ruling recognized cryptocurrency as a valid form of payment under employment contracts, setting a significant legal precedent for using digital currencies. Furthermore, the launch of RAK Digital Assets Oasis in October 2023 established the first economic free zone dedicated to cryptocurrency, blockchain, web3, and artificial intelligence, offering a business-friendly environment with tax benefits for companies.

By March 2024, over 100 companies, including prominent players like Indian exchange CoinDCX, had received licenses to operate in the RAK Digital Assets Oasis. These developments reflect Dubai’s growing prominence in the global crypto landscape while simultaneously tightening regulations to protect investors.