UAE’s new virtual asset marketing rules a ‘clear mandate to protect consumers’

Out-Law News | 12 Sep 2022 | 8:57 am | 1 min. read

New regulatory guidelines unveiled by Dubai’s Virtual Asset Regulatory Authority (VARA) for marketing virtual assets will help bolster protection for new market entrants, according to one legal expert.

VARA regulates the virtual asset sector in the emirate of Dubai and its free zone territories, excluding the Dubai International Financial Centre (DIFC). It also oversees virtual asset licensing requirements under UAE law and authorises applications from businesses for virtual asset activities.

Tom Bicknell of Pinsent Masons said: “VARA’s recently released marketing rules demonstrate a clear mandate to step in and protect consumers from bad actors in the virtual asset space. Whilst the UAE’s financial regulators have rolled out robust consumer protection measures over the last two years, VARA’s rules ensure there is no gap in protection when it comes to virtual assets that potentially fall outside of traditional financial instruments.”

He added: “We see VARA’s licensing regime as a new and potentially interesting option for new market entrants, albeit consideration should still be given to the existing virtual asset licensing regimes already established in the UAE.”

His comments come after VARA issued new regulatory guidelines (10 pages / 287KB PDF) designed to ensure that all direct and indirect marketing, promotions and advertisements for virtual assets in Dubai is fair, clear and not misleading. VARA’s new guidelines followed publication of the Virtual Assets Law, designed to regulate virtual assets in Dubai, which came into effect in March 2022. The guidelines apply to both domestic and foreign entities in Dubai that cater for, or target, citizens in Dubai or the rest of the UAE, such as media sites, search platforms, and online or off-line publishing channels.

Failure to comply with the regulatory guidelines could result in a cease-and-desist warning as well as financial penalties ranging from AED 50,000 to AED 200,000. The regulator said more serious violations, or failure to address concerns it has raised, could see a firm banned from marketing its products or services as well as the revocation of its VARA approvals and its commercial license.

In a statement, VARA said: “These regulations specifically address marketing and communications activities, ahead of operationalising the Minimum Viable Product (MVP) licensees so that any mass-market information dissemination, and consumer solicitation are designed to safeguard community interests.”

It added: “The principles are supplemented by rigid enforcement standards and penalties for non-compliance that collectively provide market confidence ahead of MVP operations, as it augments marketing, data protection and consumer protection laws that have been well embedded across the UAE.”