On October 1st, 2024, a new set of VARA regulations will officially replace the existing framework, marking a significant shift in how virtual assets and their operators are promoted and marketed in Dubai. We provide you with the comparative analysis of the key changes, highlighting the progression from the old to the new framework.
The new regulations notably develop the scale of regulated activities. Under the previous legislation, Administrative Order No 01/2022, the primary focus was on the regulation of marketing and promotional activities related to virtual assets, such as advertisements and public relations materials. The new legislation expands and include additional virtual asset services, including advisory services, decentralized finance (DeFi), and custodial services.
In addition, there are significant implementations in the new definitions for the existing virtual assets, such as payment tokens, stablecoins, and NFTs (Non-Fungible Tokens), addressing technological developments that were only lightly covered in the previous legislation. With the new rules, marketing and promotion activities are now under stricter monitoring. Any entity being engaged in the marketing or promotion of virtual assets must obtain a license specifically tailored to these activities.
Licenses for marketing-related activities also come with additional obligations, including the need to disclose all material risks related to promoted assets and provide verifiable claims in all advertisements. Under the new framework, consumer protection is further strengthened, stipulating that all promotional materials must be fair, clear, and not misleading. In addition, the general prohibitions against certain types of marketing behaviors that could harm consumers or mislead investors are also introduced.
Aggressive marketing tactics, such as exaggerated claims about potential returns or benefits, which were not as strictly regulated under the old framework, are now specifically prohibited. Businesses must ensure that all advertisements, whether digital or physical, provide balanced and fact-based information, especially concerning the risks of virtual assets.
The new regulations also introduce a more detailed and graduated penalty system. While the old framework did impose fines for general non-compliance, the new regulations categorize breaches into tiers, with corresponding penalties that escalate depending on the severity of the offense. For example, minor offenses, such as missing disclaimers, may result in administrative fines. However, more severe breaches, such as deliberately misleading promotions or failing to disclose material risks, could lead to license suspension, criminal liability, or permanent revocation of the license to operate. Furthermore, penalties for promotional events are also addressed under the new framework. Events that involve the distribution of unlicensed tokens or fail to meet transparency standards will be penalized under the new rules.
It is important to point out that licenses which were approved under the previous regulations, concerning the businesses engaged in the VA related marketing activities can continue these activities for a limited period, provided they do not contravene the new regulations’ core principles of fairness, transparency, and consumer protection. However, new marketing or promotional campaigns launched after the introduction of the new framework must fully comply with the updated rules. Businesses should therefore review their current and planned activities to ensure they align with the new standards.
The new VARA regulations mark a major shift in the regulation of virtual assets in Dubai, particularly in the areas of marketing, compliance, and penalties. By revoking Administrative Order No 01/2022 and Administrative Order No 02/2022, and replacing them with a more comprehensive and structured framework, VARA is ensuring that Dubai’s virtual asset space remains competitive, transparent, and compliant with international standards.