Dubai’s crypto regulator said any virtual assets issued in the emirate must adhere to its regulations.
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Dubai’s Virtual Assets and Regulatory Authority (VARA) issued a warning about the risks associated with memecoins, cautioning investors against speculative and unregulated assets.
On Feb. 13, Dubai’s crypto regulator warned investors that memecoins are high-risk and unregulated. The regulator said these assets are speculative, volatile and subject to market manipulation. VARA wrote:
“Many such assets lack intrinsic value and derive their pricing from social media trends, hype, or misleading promotional strategies.”
VARA urged investors to exercise caution when presented with claims of unrealistic returns, emphasizing that such promises often signal fraudulent schemes.
The regulator also warned that memecoins may rapidly collapse, leading to significant financial losses within short timeframes.
Related: Dubai court recognizes crypto as a valid salary payment
Memecoin issuance in Dubai must adhere to VARA regulations
In the investor alert, VARA said that memecoins issued from Dubai must conform to the rules enforced by VARA. This includes VARA’s marketing regulations, which cover promotions, advertising and solicitations.
In 2023, VARA issued its “Full Market Product Regulations,” which applies to market participants within Dubai, excluding those under the Dubai International Financial Centre (DIFC). The rules noted that violators may be fined as much as $135,000 if they don’t adhere to marketing rules.
On Sept. 26, VARA tightened its rules on crypto marketing, adopting stricter requirements for companies promoting digital assets in the country. The rules include adding disclosures to promotional material and receiving regulatory compliance confirmation. The rules were designed to ensure that incentives are not used to mislead investors about the risks associated with crypto investing.
VARA warns investors that memecoin platforms may be restricted without notice
In addition, VARA warned the public that entities engaging in unauthorized virtual asset activities may be subject to enforcement action.
The regulator said consumers and investors must know it can restrict access to memecoin platforms without prior notice. “It is advisable to take necessary measures to safeguard personal financial security,” VARA added.
Elsewhere, the United Kingdom’s Financial Conduct Authority (FCA) has also been eyeing memecoins. On Dec. 17, the regulator posted a warning against a Solana-based memecoin project called Retardio.
The FCA said investors who engage with the project may not be protected under the country’s Financial Ombudsman Service and Financial Services Compensation Scheme.
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