Regulations
Virtual Assets and Related Activities Regulations 2023
Introduction
The Dubai Virtual Assets Regulatory Authority [VARA] was established and authorised by Law No. [4] of 2022 Regulating Virtual Assets in the Emirate of Dubai [Dubai VA Law] to regulate Virtual Assets and Virtual Asset Service Providers [VASPs].
VARA is affiliated to the Dubai World Trade Centre Authority [DWTCA] and is the competent entity in charge of regulating, supervising, and overseeing Virtual Assets and VA Activities in all zones across the Emirate of Dubai, including Special Development Zones and Free Zones but excluding the Dubai International Financial Centre [the Emirate].
As set out in Article 5 of the Dubai VA Law, VARA has the following objectives:
1. to promote the Emirate as a regional and international hub for Virtual Assets and related services; to boost the competitive edge of the Emirate at the local and international levels; and to develop the digital economy in the Emirate; 2. to increase awareness on investment in the Virtual Asset services and products sector, and encourage innovation in this sector; 3. to contribute to attracting investments and encourage companies operating in the field of Virtual Assets to base their business in the Emirate; 4. to develop the regulations required for the protection of investors and dealers in Virtual Assets, and to endeavour to curb illegal practices in coordination with the concerned entities; and 5. to develop the regulations, rules and standards required for regulating, supervising, and overseeing Virtual Asset platforms, VASPs, and all other matters related to Virtual Assets.
The Virtual Assets and Related Activities Regulations 2023 [these Regulations] have been enacted with a view to advance the above objectives.
These Regulations set out the regulatory framework governing Virtual Assets and all related activities in the Emirate, including the general and specific supervision and enforcement powers of VARA. VARA may, from time to time, amend these Regulations in its sole and absolute discretion to address emerging risks and continually evolving developments in the global Virtual Asset sector. The most updated version of these Regulations will be made available on VARA’s website.
Capitalised terms in these Regulations have meanings defined herein or as defined in Schedule 4.
Fundamental Principles and Goals
These Regulations are guided by the following fundamental principles for effective regulation of Virtual Assets and VA Activities—
1. Market integrity and stability: the market should be fair, orderly, transparent, and prevent fraud and other criminal activity. The market should be systemically safe with consideration given to prudential risks. The market can be volatile whilst still being considered to be fair and orderly. The regime should be fully FATF compliant. 2. Consumer protection: the regime seeks to prevent harms arising from misinformation, abuse and/or poor operational practices. Market participants are free to engage with risk, so long as they give “informed consent” about their investments and VASPs have provided them with all information necessary for such consent in accordance with all applicable laws and regulations. 3. Technology neutrality and supportive of innovation: the regime must not discriminate against technology, but instead against illicit or harmful activities. If an activity is not illicit, it should be possible and desirable to regulate it without banning it entirely. VARA does not regulate products or protocols as the starting point for achieving its policy goals (except in special cases). VARA does not decide which innovations are subjectively valuable or not. 4. Regulatory resilience: the regime must not become quickly outdated with loopholes given the fast-paced nature of the industry. The regime is principles-driven and VARA is mindful when it makes prescriptive carve-outs. 5. Regulatory efficiency and proportionality: enforce a regime that is not only effective [i.e. achieves the policy intent], but does so in the least burdensome way possible for both VARA and VASPs. Any burden imposed is justified relative to the potential harm that is being mitigated.
Underpinning these fundamental principles are VARA’s two primary policy goals, which are to—
1. promote the Emirate, and ultimately the UAE, as a safe and progressive jurisdiction worthy of attracting meaningful Virtual Asset growth and innovation, substantively complementing related UAE government programmes, and 2. position VARA [and consequently, both Dubai and the UAE] as trusted and respected in the realm of international law, particularly with respect to (a) enabling FATF principles, and (b) structuring a principles-based rather than product-based framework designed to establish a point of convergence – both aspects naturally lending themselves to interoperability and passportability.
Part I – The Regulator
A. Establishment of VARA
1. VARA jurisdiction.
a. The Dubai VA Law and these Regulations apply to all Virtual Assets and VA Activities in the Emirate. b. VARA has sole and absolute discretion to interpret, waive, modify or otherwise adapt these Regulations in exercising its powers and in furtherance of its functions and objectives under the Dubai VA Law.
2. VARA powers and functions.
a. VARA has such functions, powers and objectives as are conferred on it by, or under, the Dubai VA Law and any amendments thereto. b. VARA may do whatever it considers necessary for or in connection with, or reasonably incidental to, exercising its powers, performing its functions and fulfilling its objectives under the Dubai VA Law.
3. Power to amend Regulations. VARA may, from time to time, amend these Regulations in its sole and absolute discretion.
B. Rules, Directives and Guidance
1. General power to issue Rules, Directives and Guidance. VARA may from time to time issue Rules, Directives and Guidance for the purposes of these Regulations or exercising its powers, performing its functions and fulfilling its objectives under the Dubai VA Law. 2. Rules.
a. VARA may issue Rules which have binding effect. b. All Rules, as may be amended from time to time, shall be—
i. contained in these Regulations, any Rulebooks or any other Rule-making instruments; and ii. published by VARA on its website.
3. Directives.
a. VARA may from time to time, direct any Entity or VASP, or a specified class of Entities or VASPs, to take or refrain from taking such other action as is specified, and in addition to the requirements set out in these Regulations or Rules, including but not limited to—
i. comply with specific regulatory capital or liquidity requirements; ii. apply a specific provisioning policy or treatment of specified Virtual Assets; iii. comply with specified limits on material risk exposures; iv. comply with specified limits on exposures to related parties; v. meet additional or more frequent and timely reporting and/or notification requirements; or vi. take or refrain from taking any other actions deemed not prudent, or that which may otherwise affect the ability of an Entity or a VASP to comply with applicable laws and regulations, or have an adverse effect on the Virtual Asset market in the UAE, as determined by VARA in its sole and absolute discretion.
b. Directives shall be—
i. communicated in writing by VARA to any Entity or VASP to which they relate; and/or ii. published on VARA’s website.
c. Unless otherwise specified or permitted by VARA, no Entity or VASP shall publish or otherwise publicise details [in whole or in part] of any Directives not already made public by VARA, or prior to being published on VARA’s website. d. VARA may issue Directives that waive or otherwise modify the applicability, or application, of any Regulations or Rules. e. VARA may at any time amend or revoke a Directive.
4. Guidance.
a. VARA may issue Guidance which is indicative and non-binding, and which may comprise any information as further elaboration or explanation on the application of these Regulations, or any Rules or Directives. b. Guidance may be incorporated into Rulebooks and/or Directives or be separately issued in another form by VARA. c. All Guidance, as may be amended from time to time, shall be identified by VARA as being indicative and non-binding.
5. Modification or waiver of Regulations, Rules, Directives and/or Guidance. VARA may at any time interpret, waive, modify or otherwise adapt any Regulations, Rules, Directives or Guidance by—
a. publishing revised or new versions on its website; b. expressly announcing and/or publicising the details of such interpretation, waiver, modification or adaptation; or c. communicating the details of such interpretation, waiver, modification or adaptation specifically to any VASPs or Entities to which it applies.
6. General supplementary powers. Regulations, Rules, Directives and/or Guidance made by VARA may include some or similar contexts as below—
a. make different provisions for different cases and may, in particular, make different provisions in respect of different descriptions of Virtual Assets, VA Activities or VASPs; b. make provision by reference to other Regulations, Rules, Directives or Guidance issued by VARA, as in effect from time to time; c. make provision by reference to other laws, regulations or rules made by other competent authorities, as in effect from time to time; and d. contain such incidental, supplemental, consequential and transitional provisions as may be deemed appropriate from time to time.
Part II – Issuing Virtual Assets
A. Issuance Rules
1. General requirement. Any Entity in the Emirate that issues a Virtual Asset in the course of a business, must comply with the VA Issuance Rulebook, as may be amended from time to time.
B. Power to Classify Virtual Assets
1. VARA may, in its sole and absolute discretion, classify, or otherwise provide clarification or opinion, by public notice either generally or in a specific case, on—
a. any Virtual Asset, or type of Virtual Asset, as being prohibited in the Emirate; b. any Virtual Asset, or type of Virtual Asset, as being regulated by the CBUAE; or c. VARA’s interpretation, classification or regulatory treatment of any Virtual Asset or type of Virtual Asset.
C. Prohibited Virtual Assets
1. The issuance of Anonymity-Enhanced Cryptocurrencies and all VA Activity[ies] related to them are prohibited in the Emirate.
Part III – Regulated VA Activities
A. General Prohibition and Exemptions
1. General prohibition. No Entity may carry out any VA Activity by way of business or promote, offer, or purport to do so, in the Emirate, unless it is—
a. authorised and Licensed by VARA for the VA Activity; b. an employee carrying on or otherwise facilitating a VA Activity on behalf of its employer that is Licensed by VARA; or c. an Exempt Entity.
2. “By way of business” requirement. For the purposes of Regulation III.A.1, VARA shall have sole and absolute discretion in determining whether an Entity carries on a VA Activity by way of business, and shall have regard to the following factors when making such determination—
a. whether the Entity holds itself out as conducting a VA Activity by way of business; b. the regularity, scale and continuity of the VA Activity carried out by the Entity; and c. whether there is any commercial element in how the VA Activity is being conducted, such as whether the Entity receives remuneration or other commercial benefits or value in kind for carrying out the VA Activity.
3. False claims of VASP or Exempt Entity status.
a. An Entity which, in relation to the VA Activity in question, is neither Licensed by VARA to carry out the VA Activity nor an Exempt Entity—
i. must not describe itself in whatever terms as—
1. a VASP or otherwise authorised or Licensed by VARA; or 2. an Exempt Entity;
ii. behave, or otherwise hold itself out, in a manner which indicates, or which is reasonably likely to be understood as indicating, that it is—
1. a VASP or otherwise authorised or Licensed by VARA; or 2. an Exempt Entity.
4. UAE Central Bank.
a. All VA Activities relating to UAE-CBDCs shall remain under the sole and exclusive regulatory purview of the CBUAE. b. VASPs providing VA Activities in the Emirate will need to comply with applicable CBUAE federal regulations and/or guidance, including but not limited to as they pertain to specific Virtual Assets [CBDCs and AED referenced fiat-referenced Virtual Assets].
Part IV – Licensing
A. Licensing Requirements
1. Requirement to hold a Licence.
a. All Entities wishing to carry out one or more VA Activities in the Emirate must seek authorisation from VARA prior to conducting any VA Activity. b. All Entities shall apply for, obtain and maintain a Licence issued by VARA in order to be permitted to carry out each VA Activity that it will conduct in the Emirate.
2. Licensing process. All Entities seeking a Licence from VARA shall adhere to the licensing process as prescribed by VARA from time to time when applying for the Licence. 3. Requirement to meet licensing conditions. VASPs shall comply with any and all licensing conditions as communicated by VARA in its Licence or otherwise from time to time, which shall include but not be limited to compliance with all Regulations, Rules and Directives. 4. Activities outside of the Emirate. If a VASP carries out any VA Activity for which it is Licensed by VARA to carry out in the Emirate in any jurisdiction outside of the Emirate, it shall comply with all Regulations, Rules and Directives in respect of such VA Activity carried out in such other jurisdiction as a minimum standard. For the avoidance of doubt, VASPs are obligated to meet the higher of the two regulatory standards at all times. 5. Professional Exemption.
a. Duly registered [i] practising lawyers; [ii] accountants; and/or [iii] other professionally licensed business consultants that carry out any VA Activity in a manner that is wholly incidental to their professional practice do not need a Licence, provided that they—
i. remain at all times appropriately authorised by a competent professional body to operate in the Emirate; and ii. maintain professional indemnity insurance as applicable to their profession. [the Professional Exemption].
b. VARA has sole and absolute discretion at any time to decide whether an Entity has appropriately relied on this Professional Exemption in respect of any VA Activities it has carried out.
6. Exempt Entities.
a. Exempt Entities shall not be subject to the requirements in Regulations IV.A.1-4, provided that such Exempt Entities must—
i. notify VARA and obtain confirmation of its Exempt Entity status; ii. in such instance, obtain a no-objection confirmation from VARA prior to carrying out any VA Activities in the Emirate; and iii. comply with all requirements of these Regulations, Rules, Directives and other conditions notified to it by VARA as a condition of providing such no-objection confirmation.
b. VARA has sole and absolute discretion at any time in deciding whether an Entity is an Exempt Entity and/or granting any no-objection confirmation under Regulation IV.A.6.a above.
7. Mandatory registration for large proprietary traders.
a. Any Entity in the Emirate that actively invests its own portfolio in Virtual Assets at or above USD 250,000,000 equivalent value of Virtual Assets during any rolling thirty [30] calendar days period, must register with VARA, in accordance with the registration process prescribed by VARA from time to time, prior to investing at, or in no event later than three [3] Working Days of having invested, such volume. b. Registration under Regulation IV.A.7.a does not permit any Entity to carry out any VA Activity[ies] in the Emirate and/or constitute any authorisation or Licence from VARA for any business or activities that Entity carries out and Regulations III and IV.A.1 shall apply at all times. c. An Entity investing its own portfolio does not permit accepting or trading Virtual Assets belonging to another Entity.
8. Voluntary registration for other market participants.
a. Any Entity seeking to obtain a commercial or free zone licence in the Emirate to carry out the following business activities may voluntarily register with VARA in accordance with the registration process prescribed by VARA from time to time—
i. providers of technology services relating to or utilising Distributed Ledger Technology to other businesses; or ii. Entities that actively invest their own portfolio in Virtual Assets.
b. Registration under Regulation IV.A.8.a does not permit any Entity to carry out any VA Activity[ies] in the Emirate and/or constitute any authorisation or Licence from VARA for any business activities that Entity carries out and Regulations III, IV.A.1 and IV.A.7.a shall apply at all times.
B. VARA’s Licensing and Authorisation Powers
1. Granting of Licences.
a. VARA may, in its sole and absolute discretion, grant a Licence for a VASP to carry out one or more VA Activities to which a licensing application relates, having regard to the information provided during the licensing process along with any other information VARA deems relevant. b. In respect of each granted Licence, VARA shall specify the permitted VA Activities, described in such a manner as VARA considers appropriate. c. VARA may—
i. incorporate in the Licence such limitations and stipulations as it considers appropriate, for example, circumstances in which a VA Activity may, or may not, be carried on; ii. specify a narrower or wider description of a VA Activity than that to which a licensing application relates; and/or iii. grant a Licence for carrying on a VA Activity only for a specified time.
d. In determining whether or not to grant a Licence, VARA may have regard to any judgment, opinion, or actions taken by any other regulator or authority, inside or outside of the Emirate, which VARA deems to be relevant to such licensing application.
2. Variation, suspension, or revocation of Licences.
a. Power to vary, suspend or revoke Licences. VARA may, in its sole and absolute discretion—
i. vary a Licence in any way, including but not limited to, by adding a VA Activity, removing a VA Activity or varying the description of a VA Activity, or by varying any limitations which apply to such Licence; ii. revoke or suspend all, or any part, of a Licence—
1. on any ground on which it may refuse to issue a Licence; 2. for a material violation of any law, Regulation, Rule or Directive; 3. for Good Cause; 4. if the VASP is Insolvent or subject to Insolvency Proceedings; or 5. for failure of the VASP to pay a judgment, made by any court, within or outside the UAE, within thirty [30] calendar days after the judgment becomes final or otherwise payable by the VASP.
b. Suspension. In the event VARA suspends a Licence under Regulation IV.B.2.a.ii, it shall prescribe the period for which such Licence is suspended, and in turn, this shall be communicated to the VASP. Such VASP may not re-commence any VA Activity[ies] subject to such suspension without prior approval from VARA to do so, regardless of whether the period communicated has expired, unless the suspension notice from VARA explicitly provides for resumption by default upon completion of the stipulated period. c. Preservation of powers. Nothing in these Regulations shall be construed as limiting any power granted to VARA under any other provision of the Dubai VA Law, including any power to investigate possible violations of laws, Regulations, Rules or Directives, or to impose penalties, or take any other action, against any Entity for violation of such laws, Regulations, Rules or Directives.
3. Imposition of further requirements by VARA.
a. Where an Entity has applied to VARA for a Licence, or a variation of a Licence, VARA may impose on such Entity additional requirements as it considers appropriate including, but not limited to, in the following circumstances—
i. the Entity is failing, or is likely to fail, to satisfy the licensing conditions; ii. the Entity has contravened any applicable laws, Regulations, Rules or Directives; or iii. it is desirable for VARA to exercise its power to further one or more of its objectives.
4. Authorisation and supervision fees.
a. VARA may charge an Entity seeking to apply for a Licence, or any other authorisation from VARA, a fee for processing such application. If an application is denied or withdrawn, no fees shall be refunded and/or refundable. Such application fees will be applicable per application. b. Any Entity who has been granted a Licence, any other approval or is otherwise subject to supervision by VARA, will be charged applicable fees by VARA for such supervision. c. The fees set out in Schedule 2 of these Regulations, as may be amended from time to time, shall apply to all VASPs.
Part V – VA Activity Rulebooks
1. Rulebooks. VASPs must comply at all times with the following Rulebooks, as may be amended from time to time—
a. Company Rulebook; b. Compliance and Risk Management Rulebook; c. Technology and Information Rulebook; and d. Market Conduct Rulebook.
2. VA Activity specific Rulebooks. In addition to the Rulebooks in Regulation V.1 above, VASPs must comply at all times with each of the following Rulebooks that correspond to the VA Activity[ies] it is Licensed to carry out, as may be amended from time to time—
a. Advisory Services Rulebook; b. Broker-Dealer Services Rulebook; c. Custody Services Rulebook; d. Exchange Services Rulebook; e. Lending and Borrowing Services Rulebook; f. VA Management and Investment Services Rulebook; and g. VA Transfer and Settlement Services Rulebook.
Part VI – Anti-Money Laundering and Combating the Financing of Terrorism
A. VARA’s Supervisory Authority
1. These Regulations are made in recognition of Federal Decree-Law No. [20] of 2018 on Anti Money Laundering, Combating the Financing of Terrorism and Financing of Illegal Organisations, Federal Law No. [7] of 2014 on Combating Terrorism Offences and any other federal legislation relating to money laundering, terrorist financing, the financing of unlawful organisations or sanctions non-compliance as may be amended from time to time [the Federal AML-CFT Laws]. 2. A reference in these Regulations to money laundering is taken to include the financing of terrorism and all other unlawful organisations, and sanctions non-compliance. 3. For the purposes of the Federal AML-CFT Laws, by virtue of the Dubai VA Law, VARA—
a. is designated as a Supervisory Authority for the Emirate in respect of all VASPs and VA Activities; b. is responsible for regulation in relation to money laundering in the Emirate in respect of all VASPs and VA Activities; and c. has the power to supervise compliance with relevant Federal AML-CFT Laws by VASPs in the Emirate.
4. Nothing in these Regulations is intended to limit any function or power conferred on another body or authority under the Federal AML-CFT Laws. 5. Where VARA detects conduct that it suspects may relate to money laundering, it shall promptly report its suspicions to the relevant authority exercising powers and performing functions under the relevant Federal AML-CFT Laws.
B. AML/CFT Obligations of VASPs
1. VASPs must comply with all Federal AML-CFT Laws as well as all other legislation, regulatory requirements, these Regulations, Rules and Directives in respect of AML/CFT as may apply to its VA Activities, businesses or operations in any jurisdiction at all times, including but not limited to those contained in Rulebooks and FATF recommendations as may be incorporated by VARA into its regulatory framework from time to time.
Part VII – Marketing, Advertising or Promotion
A. Marketing Regulations
1. All Entities must comply with the Administrative Order No. [01] of 2022: Relating to Regulation of Marketing, Advertising and Promotions Related to Virtual Assets and Administrative Order No. [02] of 2022: Pursuant to Issued Administrative Order No. [01] of 2022: Relating to Regulation of Marketing, Advertising and Promotions Related to Virtual Assets, issued by VARA and as may be amended or superseded from time to time.
Part VIII – Market Offences
A. Market Offences and VARA’s Power to Stipulate Market Offences and Accepted Practices
1. For the purposes of these Regulations, Market Offences are any of the offences listed in Regulation VIII.A.2, with the exception of any Accepted Practice, when conducted in the Emirate or having an effect on the price of a Virtual Asset traded in the Emirate, whether conducted by one Entity alone or by two or more Entities jointly or in concert. 2. The following are Market Offences—
a. Insider Dealing; b. Unlawful Disclosure; and c. Market Manipulation.
3. VARA may, in its sole and absolute discretion, prescribe or otherwise classify any other behaviour as being a Market Offence in addition to those listed in Regulation VIII.A.1 above from time to time and/or for any specified period of time. 4. By way of exception to Regulations VIII.A.1-3 above, any behaviour that has been specified as an Accepted Practice either under any of Regulation VIII.B-H or by VARA specifying such behaviour as an Accepted Practice in its sole and absolute discretion for any specified period of time, shall not amount to a Market Offence.
B. Inside Information
1. Inside Information means information of a precise nature, which has not been made public, and which, if it were made public, would reasonably be expected to affect the price of a Virtual Asset or would affect the investment judgment of a reasonable individual in respect of a transaction involving that Virtual Asset. The information need not be the determining factor behind any given transaction, but should have a material impact on the decision of any reasonable investor as to whether to carry out such transaction [Inside Information]. 2. For the purposes of Regulation VIII.B.1, information shall be deemed to be of a precise nature if it indicates a set of circumstances which exists or which may reasonably be expected to come into existence, or an event which has occurred or which may reasonably be expected to occur, where it is specific enough to enable a conclusion to be drawn as to the possible effect of that set of circumstances or event on the price of a Virtual Asset. 3. An Entity may possess Inside Information as a result of, but not limited to—
a. being a member of the administrative, management or supervisory bodies of any Issuer; b. being an investor in any Issuer; c. having access to the Inside Information through any employment, profession, volunteering, contribution or duties; d. being involved in illegal or criminal activities; or e. any circumstances where the Entity knows or should reasonably have known that any information is Inside Information.
C. Insider Dealing
1. Insider Dealing arises where an Entity possesses Inside Information and uses that information by carrying out a transaction, for its own account or for the account of a third party, directly or indirectly, in relation to a Virtual Asset to which the Inside Information relates [Insider Dealing]. 2. The use of Inside Information by cancelling or amending a transaction or order concerning a Virtual Asset to which the Inside Information relates, where the transaction or order was started or placed before the Entity concerned possessed the Inside Information, shall also be Insider Dealing. 3. Recommending, counselling, procuring or otherwise facilitating another Entity to engage in Insider Dealing, or inducing another Entity to engage in Insider Dealing arises where the Entity possesses Inside Information and it recommends, counsels or procures on the basis of that Inside Information, that another Entity—
a. carry out a transaction in relation to the Virtual Asset to which that Inside Information relates, or induces that Entity to carry out such a transaction; or b. cancel or amend a transaction or order concerning a Virtual Asset to which that Inside Information relates, or induces that Entity to make such a cancellation or amendment.
D. Unlawful Disclosure
1. Unlawful disclosure of Inside Information arises where an Entity possesses Inside Information and discloses that Inside Information to any other Entity, except where the disclosure is made in the normal exercise of an employment, a profession or duties [Unlawful Disclosure]. 2. For the purposes of these Regulations, the onward disclosure of recommendations or inducements amounts to Unlawful Disclosure where the Entity disclosing the recommendation or inducement knew or ought to have known that it was based on Inside Information.
E. Prohibition of Insider Dealing and of Unlawful Disclosure
1. No Entity shall—
a. engage or attempt to engage in Insider Dealing; b. recommend that another Entity engage in Insider Dealing or induce or otherwise facilitate another Entity to engage in Insider Dealing; or c. engage or attempt to engage in Unlawful Disclosure.
F. Legitimate Behaviour of Treating Inside Information
1. For the purposes of Regulation VIII.E.1, where an Entity is a legal entity and not an individual, such Entity has not engaged in Insider Dealing on the basis of possessing Inside Information where that Entity—
a. has established, implemented and maintained adequate and effective internal arrangements and procedures to limit access to Inside Information and prevent Insider Dealing to effectively ensure that neither the individual who made the decision on the VASP’s behalf to carry out a transaction in relation to a Virtual Asset to which the Inside Information relates, nor another individual who may have had an influence on that decision, was in possession of the Inside Information; and b. has not encouraged, made a recommendation to, induced or otherwise influenced the individual who made the decision on its behalf to carry out a transaction in relation to a Virtual Asset to which the information relates.
2. For the purposes of Regulation VIII.E.1, it shall not be deemed from the mere fact that an Entity is in possession of Inside Information that such Entity has used that Inside Information and has engaged in Insider Dealing on the basis of a transaction where that Entity—
a. for the Virtual Asset to which that Inside Information relates, is a market maker or an Entity authorised to act as a counterparty, and the transaction in relation to the Virtual Asset to which the Inside Information relates is made legitimately in the normal course of the exercise of its function as a market maker or as a counterparty for that Virtual Asset; or b. is authorised to execute orders on behalf of third parties, and the transaction in relation to the Virtual Assets to which the order relates, is made to carry out such an order legitimately in the normal course of the exercise of that Entity’s employment, profession or duties.
3. For the purposes of Regulation VIII.E.1, it shall not be deemed from the mere fact that an Entity is in possession of Inside Information that such Entity has engaged in Insider Dealing on the basis of a transaction where that Entity conducts a transaction and that transaction is carried out in the discharge of an obligation that has become due in good faith and not to circumvent the prohibition against Insider Dealing and—
a. that obligation results from an order placed or an agreement concluded before the Entity concerned possessed Inside Information; or b. that transaction is carried out to satisfy a legal or regulatory obligation that arose before the Entity concerned possessed Inside Information.
G. Market Sounding
1. Market Sounding comprises the communication of information, prior to the announcement of a transaction in Virtual Assets, in order to gauge the interest of potential investors in a possible transaction in Virtual Assets and the conditions relating to it such as its potential size or pricing, to one or more potential investors in those Virtual Assets by—
a. an Issuer; b. a secondary offeror of a Virtual Asset, in such quantity or value that the transaction is distinct from ordinary trading and involves a selling method based on the prior assessment of potential interest from potential investors; or c. a VASP or other third party acting on behalf or on the account of an Entity referred to in Regulation VIII.G.1.a or b [Market Sounding].
2. A disclosing Entity shall, prior to conducting the Market Sounding, specifically consider whether the Market Sounding will involve the disclosure of Inside Information. The disclosing Entity shall make a written record of its conclusion and the relevant reasons. It shall provide such written records to VARA upon request. This obligation shall apply to each disclosure of information throughout the course of the Market Sounding. The disclosing Entity shall keep the written records referred to in this Regulation VIII.G.2 up-to-date and in any event update them weekly. 3. A disclosing Entity shall, before making the disclosure—
a. obtain the consent of the Entity receiving the Market Sounding to receive the information; b. inform the Entity receiving the Market Sounding that it is prohibited from using that information, or attempting to use that information, by acquiring or disposing of, for its own account or for the account of a third party, directly or indirectly, Virtual Assets relating to that information; c. inform the Entity receiving the Market Sounding that it is prohibited from using that information, or attempting to use that information, by cancelling or amending an order which has already been placed concerning a Virtual Asset to which the information relates; and d. inform the Entity receiving the Market Sounding that by agreeing to receive the information it is obliged to keep the information confidential.
4. The disclosing Entity shall make and maintain a record of all information given to Entities receiving the Market Sounding, including the information given in accordance with Regulation VIII.G.3, and the identity of the potential investors to whom the information has been disclosed, including but not limited to the Entity and the date and time of each disclosure. The disclosing Entity shall provide such record to VARA upon request. 5. Where information that has been disclosed in the course of a Market Sounding ceases to be Inside Information according to the assessment of the disclosing Entity, the disclosing Entity shall inform the recipient accordingly, as soon as possible. 6. Any Entity receiving a Market Sounding shall assess for itself whether it is in possession of Inside Information or when it ceases to be in possession of Inside Information. 7. The disclosing Entity shall keep the records referred to in this Regulation VIII.G for a period of at least eight [8] years.
H. Market Manipulation
1. Market Manipulation shall comprise the following activities, with the exception of any Accepted Practice—
a. entering into a transaction, placing an order to trade or any other behaviour which—
i. gives, or is likely to give, false or misleading signals as to the supply of, demand for or price of a Virtual Asset; or ii. secures, or is likely to secure, the price of one or several Virtual Assets at an abnormal or artificial level;
b. entering into a transaction, placing an order to trade or any other activity or behaviour which affects or is likely to affect the price of one or several Virtual Assets, which employs a fictitious device or any other form of deception or contrivance; c. disseminating information through the media, which gives, or is likely to give, false or misleading signals as to the supply of, demand for, or price of a Virtual Asset, or is likely to secure the price of one or several Virtual Assets at an abnormal or artificial level, including the dissemination of rumours where the Entity who made the dissemination knew, or ought to have known, that the information was false or misleading; d. transmitting false or misleading information or providing false or misleading inputs in relation to a benchmark where the Entity who made the transmission or provided the input knew or ought to have known that it was false or misleading, or any other behaviour which manipulates the calculation of a benchmark; e. the conduct by an Entity, or Entities acting in collaboration, to inflate the price of a Virtual Asset by securing a dominant position over the supply of or demand for a Virtual Asset; f. the buying or selling of Virtual Assets at a particular point in time in the trading or settlement cycle of any given Virtual Asset so as to have the effect of misleading investors acting on the basis of the prices displayed; g. the placing of orders on a trading venue operated by a VASP providing Exchange Services or other organised market for Virtual Assets, including any cancellation or modification thereof, by any available means of trading, including by electronic means, which has one of the effects referred to in this Regulation VIII.H.1—
i. disrupting or delaying the functioning of the trading system of the trading venue or being likely to do so; ii. making it more difficult for other Entities to identify genuine orders on the trading system of the trading venue or being likely to do so, including by entering orders which result in the overloading or destabilisation of the order book; or iii. creating or being likely to create a false or misleading signal about the supply of, or demand for, or price of, a Virtual Asset, in particular by entering orders to initiate or exacerbate a trend;
h. taking advantage of occasional or regular access to the traditional or electronic media by voicing an opinion about a Virtual Asset [or indirectly about its Issuer] whilst having previously taken positions on that Virtual Asset and profiting subsequently from the impact of the opinions voiced on the price of that Virtual Asset without having simultaneously disclosed that conflict of interest to the public in a proper and effective way; i. omission or failure to take any action which would correct any activities listed in Regulations VIII.H.1.a-h; and j. distributing, maintaining, or otherwise making available to others any software, algorithm, or other computer programme designed to carry out any of the activities listed in Regulations VIII.H.1.a-h with the exception of any Accepted Practice [Market Manipulation].
2. Where the Entity referred to in Regulation VIII.H.1 is a legal entity, the Regulation shall also apply to the individual[s] who participate in the decision to carry out activities for the account of the legal entity concerned. 3. By way of exception to Regulation VIII.H.1, Accepted Practices shall include, but not be limited to, the following, which shall not amount to Market Manipulation—
a. entering into a lending, borrowing, repurchase or reverse repurchase transaction in respect of a Virtual Asset for legitimate trading purposes which does not disrupt the fair and orderly functioning of any market involving Virtual Assets and without any intention to do so; b. entering into a transaction involving the provision of a Virtual Asset as collateral that is not designed to have any of the effects described in Regulation VIII.H.1.g; c. entering into a transaction in a Virtual Asset for the purposes of satisfying a prior legal or regulatory obligation, provided that [where that commitment was created under contract] the obligation entered into does not disrupt the fair and orderly functioning of any market involving Virtual Assets and without any intention to do so; and d. use of an algorithmic or high-frequency trading strategy that is not designed to have any of the effects described in Regulation VIII.H.1.g and which has been designed and implemented in such a way as to not disrupt the fair and orderly functioning of any market involving Virtual Assets and without any intention to do so.
I. Prohibition of Market Manipulation
1. No Entity shall engage in or attempt to engage in Market Manipulation in the Emirate.
J. Prevention and Detection of Market Offences
1. VASPs shall establish and maintain effective arrangements, systems and procedures aimed at preventing and detecting Market Offences or attempted Market Offences. 2. VASPs shall report transactions, orders or activities to the UAE FIU and to VARA where the VASP has a reasonable suspicion that such transactions, orders or activities in any Virtual Asset, whether placed or executed on or outside a trading venue operated by a VASP providing Exchange Services or other organised market for Virtual Assets, could constitute a Market Offence, an attempted Market Offence or any other unfair practice detrimental to the fair and orderly functioning of any market involving Virtual Assets. 3. When reporting suspicious transactions, orders or activities, VASPs shall include—
a. the name of the Virtual Asset that may be impacted by suspicious transactions, orders or activities; b. the identity of any Entities involved; c. specific dates and times of the suspicious transactions, orders or activities; d. an explanation of reasons for believing that a Market Offence or any other unfair practice has been committed; e. all other information required by the UAE FIU; and f. all additional information reasonably requested by VARA, or the UAE FIU, in order to make an accurate assessment.
4. VASPs shall make all relevant data in their possession available to VARA for inspection on request.
Part IX – Supervision, Examination and Enforcement
A. Investigation or Examination by VARA
1. All Entities are subject to investigation and/or examination by VARA at any time or in any way deemed necessary by VARA for the purposes of exercising its powers, performing its functions, or fulfilling its objectives under the Dubai VA Law. 2. All Entities shall co-operate with VARA during any investigation and/or examination and must provide VARA with all books and records requested by VARA to facilitate any investigation and/or examination. 3. VASPs and Issuers remain subject to Regulations, Rules and Directives for a period of ten [10] years following the date that it is no longer regulated by VARA.
B. Examination
1. All Entities shall allow and assist VARA to examine the Entity whenever in VARA’s judgment such examination is necessary or advisable for the purposes of exercising its powers, performing its functions or fulfilling its objectives under the Dubai VA Law. 2. VASPs and Issuers shall ensure, without limitation, that VARA is able to determine—
a. the financial condition of the VASP or Issuer; b. the safety and soundness of the conduct of its business, VA Activities or Virtual Asset; c. all management and/or operational policies of the VASP or Issuer; d. whether the VASP or Issuer has complied with the requirements of all applicable laws, Regulations, Rules and Directives; and e. such other matters as determined by VARA which may affect a VASP’s conduct of VA Activities and/or compliance with its licensing conditions.
3. VASPs and Issuers shall allow and assist VARA in any investigations as it shall deem necessary to determine whether a VASP or Issuer has violated any applicable laws, Regulations, Rules or Directives and, to the extent necessary, shall allow and assist VARA to examine all relevant data, facilities, books, records, accounts, documents, and other information. 4. VASPs and Issuers shall ensure they have all necessary consent of their clients to report information for transactions over which VARA has jurisdiction. 5. For the purpose of determining the financial condition of the VASP or Issuer, its safety and soundness practices, or whether it has complied with the requirements of all applicable laws, Regulations, Rules and Directives, VASPs and Issuers shall assist VARA, when in VARA’s judgment it is necessary or advisable, to examine an affiliate of the VASP or Issuer. 6. VASPs and Issuers shall provide or produce information or documents requested by VARA—
a. before the end of such period as may be specified in the relevant notice issued by VARA, unless the VASP or Issuer demonstrates to VARA’s satisfaction that such period is unreasonable; and b. through such means as may be specified in the notice.
7. VARA may require any information or documents provided by a VASP or Issuer to be verified or authenticated in such manner as VARA requires.
C. Enforcement, Fines and Penalties
1. VARA may, in its sole and absolute discretion, take enforcement actions against any Entity in the event of the following—
a. for violation of any law [including the Dubai VA Law and Federal AML-CFT Laws]; b. for any violation of these Regulations, or any Rules or Directives; c. on any ground on which VARA might refuse to issue a Licence under these Regulations; d. for Good Cause; and e. other grounds determined by VARA in exercising its powers, performing its functions or fulfilling its objectives under the Dubai VA Law.
2. Such enforcement actions may include but are not limited to—
a. issuing written reprimands; b. issuing enforcement notices requiring non-compliance to be rectified within a specified period of time; c. limiting or revising the scope of any Virtual Assets or VA Activities under a Licence; d. suspending or revoking a Licence; e. requiring a VASP to cease any VA Activity or other business activity, either for a specified or indefinite period of time; f. requiring any Entity to stop or refrain from doing or continuing to do any acts and seek a preliminary injunction or other legal means when necessary to restrain such Entity, when deemed by VARA to be in the public interest; g. imposing fines or other civil penalties in accordance with Schedule 3 of these Regulations or otherwise published by VARA from time to time; h. undertaking additional supervision, monitoring or reporting requirements; and i. any other enforcement action determined by VARA.
3. VARA may impose fines, civil penalties or other enforcement actions directly against the Responsible Individuals of a VASP. 4. VARA will consider the full circumstances of each case when determining whether or not to issue a fine and the amount thereof. VARA may do this either in conjunction with, or independently of, any other type of enforcement action as set out in Regulation IX.C.2. The types of factors which will be evaluated include—
a. the nature, seriousness and impact of the violation; b. whether any action constitutes a violation of a Market Offence; c. the conduct of the Entity after the violation and throughout any investigation or examination by VARA; d. the previous disciplinary record and compliance history of the Entity or relevant individual[s], and in particular whether the case involves a first-time violation under No. 3 or No. 4 of Schedule 3 of these Regulations [in which case VARA reserves the right to consider not issuing an immediate fine, and instead mandate effective remedial action to address the impact of the violation]; e. the interpretation and application of VARA published materials including Guidance, industry codes and other such materials as may be published from time to time; and f. any action taken by VARA or by other domestic or international regulatory bodies in similar cases.
5. Grievances. VARA may establish a committee or other body to hear grievances or complaints in respect of any enforcement action it has taken, the details of which shall be published by VARA from time to time.
Part X – Confidentiality
A. Duty of Confidentiality
1. All Entities must keep confidential all information relating to the operations, business or other affairs of VARA, including but not limited to all communication and correspondence with VARA and any investigations, enforcement or other actions by VARA, unless or until—
a. such information is released into the public domain either by—
i. VARA; or ii. an Entity without being in contravention of this Regulation X.A.1 or any other duty of confidentiality howsoever established; or
b. VARA has given explicit written consent to the disclosure of such information.
2. All Entities must ensure that any Entity, including any employees, contractors, service providers or any other individuals howsoever engaged, who has access to such information are subject to the same or stricter obligations of confidentiality as specified in Regulation X.A.1.
Schedule 1 – VA Activities
VA Activity VA Activity “Advisory Services” means offering, providing or agreeing to provide a personal recommendation* to a client, either upon its request, or on the initiative of the Entity providing the recommendation, in respect of one or more actions or transactions relating to any Virtual Assets.
*When providing a personal recommendation, the Entity providing the recommendation shall consider the following factors at a minimum in respect of each client—[a] knowledge and experience in investing in Virtual Assets; [b] investment objectives including, but not limited to, risk tolerance, time horizon and venues through which they can acquire Virtual Assets; and [c] financial circumstances including, but not limited to, their ability to bear sudden and significant losses or proportion of their net worth invested in Virtual Assets. “Broker-Dealer Services” means any of the following—[a] arranging orders for the purchase and sale of Virtual Assets between two Entities; [b] soliciting or accepting orders for Virtual Assets and accepting fiat currency, or other Virtual Assets, for such orders; [c] facilitating the matching of transactions in Virtual Assets between buyers and sellers; [d] entering into Virtual Asset transactions as a dealer on behalf of the Entity for its own account; [e] making a market in Virtual Assets using client assets; or [f] providing placement, distribution or other issuance* related services to clients issuing Virtual Assets.
*As per Regulation II, any Entity in the Emirate that issues a Virtual Asset in the course of a business, must comply with the VA Issuance Rulebook, as may be amended from time to time.“Category 1 VA issuance” has the meaning ascribed to it in the VA Issuance Rulebook. “Custody Services” means safekeeping Virtual Assets for or on behalf of another Entity and acting only on verified instructions from or on behalf of such Entity*.
*All VASPs shall be subject to Rules regarding the storage and custody of clients’ Virtual Assets. Only VASPs which segregate each client’s assets in separate VA Wallets will qualify for a Custody Services Licence.“Exchange Services” means any of the following—[a] conducting an exchange, trade or conversion between Virtual Assets and fiat currency; [b] conducting an exchange, trade or conversion between one or more Virtual Assets; [c] matching orders between buyers and sellers and conducting an exchange, trade or conversion between [i] Virtual Assets and fiat currency or [ii] one or more Virtual Assets; or [d] maintaining an order book in furtherance of [a], [b] or [c] above. “Lending and Borrowing Services” means carrying out a contract under which a Virtual Asset shall be transferred or lent from one or more parties [the Lender[s]] to one or more other parties [the Borrower[s]] where the Borrower[s] shall commit to return the same, at the request of the Lender[s], at any time either during or at the end of the period agreed upon. “VA Management and Investment Services” means acting on behalf of an Entity as an agent, or fiduciary, or otherwise taking responsibility for the management, administration or disposition of that Entity’s Virtual Assets.
Examples may include, but shall not be limited to—[a] investment management services or otherwise managing Virtual Assets; and [b] taking responsibility for the staking of Virtual Assets for the purposes of earning fees or other amounts paid to validators and/or node operators of a proof-of-stake Distributed Ledger Technology. “VA Transfer and Settlement Services” means the transmission or transfer, and/or settlement of Virtual Assets from one Entity to another Entity or from one Entity to another VA Wallet, address or location. Schedule 2 – Supervision and Authorisation Fees
1. The fees set out in the table below are applicable to all Licence applications and VASPs:
VA Activity Licence Application Fee [for one regulated VA Activity only] Licence Extension Fee [for each additional regulated VA Activity] Annual Supervision Fee [for each regulated VA Activity] Advisory Services AED 40,000 50% of lower Licence Application Fee[s] AED 80,000 Broker-Dealer Services AED 100,000 AED 200,000 Custody Services AED 100,000 AED 200,000 Exchange Services AED 100,000 AED 200,000 Lending and Borrowing Services AED 100,000 AED 200,000 VA Management and Investment Services AED 100,000 AED 200,000 VA Transfer and Settlement Services AED 40,000 AED 80,000 2. The Licence Application Fee is payable for all Licence applications for any regulated VA Activity. Where an Entity is applying for a Licence for more than one regulated VA Activity, the Licence Extension Fee is payable for each additional VA Activity. These fees are only due at the time of submission of the Licence application. The application will not be processed until the payment of these fees is received. 3. VASPs must pay an Annual Supervision Fee for each VA Activity Licensed, in advance of conducting VA Activity[ies]. 4. VARA may, in its sole and absolute discretion, impose additional fees or otherwise modify supervision and authorisation fees, including but not limited to in circumstances where it considers necessary to allocate additional resources for regulatory oversight or supervision or in response to complaints made to VARA about a VASP. 5. Any fees charged by VARA are separate from, and independent of, any fees which may be charged by any other competent authority, either in or outside of the UAE. 6. VARA may, in its sole and absolute discretion, impose a fee for applications by prospective Issuers for approval to issue a Virtual Asset.
Schedule 3 – Fines
1. In accordance with Regulation IX.C, VARA has the sole and absolute discretion to issue fines against any Entity and determine the amounts thereof. 2. The following table sets out the nature and indicative amounts of fines that VARA may impose on any Entity for violations of Regulations, Rules, Directives or Licence conditions, but which shall be determined by VARA in accordance with applicable local and federal laws and by reference to its assessment of all relevant factors, including those set out in Regulation IX.C. 3. VARA may amend the grounds for issuance and/or amount of the indicative fines set out in this Schedule 3, including adding new categories of fines, by amendment to these Regulations or by Directive at any time. No. Nature of Violation / Ground[s] for Issuance of Fine Indicative Fine Amount per Violation [AED] 1. Violation of AML/CFT and “know your customer” requirements [including, but not limited to, CDD] in— [a] Regulations and/or Directives by any Entity [including, but not limited to, VASPs]; or [b] Rules [including, but not limited to, Part III of the Compliance and Risk Rulebook] by any VASP. To be determined in accordance with applicable local and federal laws. 2. Violation of— [a] Rules in the Compliance and Risk Management Rulebook [not covered in No. 1 above] or Market Conduct Rulebook by any Entity; or [b] Regulations and/or Directives related to Market Offences by any Entity [including, but not limited to, VASPs]. Any of the following—[a] for any individual, up to the higher of [i] AED 20,000,000, or [ii] 200% of the profits gained or losses avoided; or [b] for any corporate Entity, up to the higher of [i] AED 50,000,000, [ii] 15% annual revenue of the corporate Entity, or [iii] 300% of the profits gained or losses avoided [if greater than [b][i] or [b][ii]]. 3. Violation of Regulations, Rules, or Directives not covered in No. 1 or No. 2 above by any Entity. 4. Issuance of a fine against any Entity pursuant to Regulations IX.C.1.a-e and IX.C.2.i on the basis of any of the following non-exhaustive grounds— [a] any Entity carrying out VA Activity[ies] in violation of Regulation III.A.1 [e.g. without being authorised and Licensed by VARA]; [b] any Entity issuing a Virtual Asset in violation of Regulation II.A.1; [c] any Entity in violation of the mandatory registration requirement in Regulation IV.A.7; [d] any Entity misrepresenting to any member of the public [i] any relationship or engagement with VARA, or [ii] such Entity’s ability to unduly influence or accelerate the licensing process [including, but not limited to, any violation of Regulation X]; and/or [e] any Entity in violation of any Ultimate Beneficial Owner [UBO] disclosure requirements in Regulations, Rules and/or Directives. 5. Non-payment of fine within any timeframe specified by VARA. Further fine to be issued, the amount of which shall accrue from when a fine is due at 1% per month [rounded up to the nearest full month] for any unpaid amounts of the fine on a compounding basis, until the initial fine and the further fine are paid in full.4. In assessing whether to issue a fine against an individual, VARA shall, in its sole and absolute discretion, consider the following—
a. the materiality and severity of the violation [including, but not limited to, violation of a Regulation, Rule and/or Directive by an Entity which the individual is employed by];
b. the materiality and severity of the individual’s failure to adequately manage responsibilities, obligations and/or functions relevant to their roles as stipulated in the Rulebooks; c. whether the individual acted reasonably in accordance with the VASP’s internal policies; d. whether the individual acted with wilful negligence of their and/or the VASP’s responsibilities under any Regulation, Rule and/or Directive; e. to the extent applicable, factors set out in Regulation IX.C.4; and f. all other factors which VARA may consider to be relevant.
5 Notwithstanding No. 5 in the above table of this Schedule 3, if a fine issued pursuant to these Regulations is not paid by an Entity within the timeframe specified by VARA, VARA may, in its sole and absolute discretion, take any further action necessary to recover payment including, but not limited to, taking further enforcement action[s] and/or referring the matter to any law enforcement agencies and competent courts.
Schedule 4 – Definitions
Term Definition “Accepted Practice” means any behaviour that does not amount to a Market Offence as a result of being specified as an accepted practice either under any of Regulation VIII.B-H or by VARA acting in its sole and absolute discretion under Regulation VIII.A. “AML/CFT” means anti-money laundering, combating the financing of terrorism, counter proliferation financing and financial sanctions compliance. “Anonymity-Enhanced Cryptocurrencies” means a type of Virtual Asset which prevents the tracing of transactions or record of ownership through distributed public ledgers and for which the VASP has no mitigating technologies or mechanisms to allow traceability or identification of ownership. “CBDC” means a central bank digital currency. “CBUAE” means the Central Bank of the United Arab Emirates. “CDD” has the meaning ascribed to it in the Compliance and Risk Management Rulebook. “Company Rulebook” means the Company Rulebook issued by VARA pursuant to these Regulations, as may be amended from time to time. “Compliance and Risk Management Rulebook” means the Compliance and Risk Management Rulebook issued by VARA pursuant to these Regulations, as may be amended from time to time. “Directive” means a directive issued by VARA under these Regulations which shall have binding effect and shall, if required, attach a penalty determined and imposed by VARA in its sole discretion. “Distributed Ledger Technology” or “DLT” has the meaning ascribed to the term “Distributed Ledger Technology” in the Dubai VA Law. “Dubai VA Law” means Law No. [4] of 2022 Regulating Virtual Assets in the Emirate of Dubai, as may be amended from time to time. “DWTCA” means the Dubai World Trade Centre Authority. “Emirate” means all zones across the Emirate of Dubai, including Special Development Zones and Free Zones but excluding the Dubai International Financial Centre. “Entity” means any legal entity or individual. “Exempt Entity” means—[a] an Entity of the federal government of the UAE and/or the government of Dubai; and [b] all public, non-profit, not-for-profit and charitable Entities of any Entity described in [a] above. “FATF” means the Financial Action Task Force. “Federal AML-CFT Laws” means all UAE federal government legislation relating to AML/CFT, the financing of unlawful organisations or sanctions non-compliance as may be in force from time to time, including all executive regulations, cabinet resolutions or cabinet decisions relating to the same, as may be amended from time to time, including but not limited to—[a] Cabinet Resolution No. [24] of 2022 Amending certain Provisions of Cabinet Resolution No. [10] of 2019 Issuing the Executive Regulations of Federal Decree-Law No. [20] of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organisations; [b] Cabinet Resolution No. [10] of 2019 Issuing the Executive Regulations of Federal Decree-Law No. [20] of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organisations; [c] Federal Decree-Law No. [26] of 2021 Amending Some Provisions of Federal Decree-Law No. [20] of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organisations; [d] Federal Decree-Law No. [20] of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organisations and its executive regulations, as may be amended from time to time; and [e] Cabinet Decision No. [74] of 2020 Regarding Terrorism Lists Regulation and Implementation of UN Security Council Resolutions on the Suppression and Combating of Terrorism, Terrorist Financing, Countering the Proliferation of Weapons of Mass Destruction and its Financing and Relevant Resolutions. “Good Cause” means, in VARA’s sole and absolute discretion, where an Entity has defaulted or is likely to default in performing its obligations or financial engagements, or engages in unlawful, dishonest, wrongful or inequitable conduct, or practices that may cause harm to the public. “Guidance” means any Guidance issued by VARA under these Regulations which is indicative and does not have binding effect. “Inside Information” has the meaning ascribed to it in Regulation VIII.B.1. “Insider Dealing” has the meaning ascribed to it in Regulation VIII.C.1. “Insolvency Proceedings” means any legal proceedings or other procedure taken in relation to—[a] the suspension of payments, a moratorium of any indebtedness, winding up, receivership, bankruptcy, dissolution, administration or reorganisation [by way of voluntary arrangement, scheme of arrangement or otherwise]; [b] the appointment of a liquidator, receiver, administrator, compulsory manager, trustee or similar officer in respect of an Entity and/or its assets; [c] enforcement of any security over any asset of an Entity; or [d] any analogous procedure or step is taken in any jurisdiction. Except that, the above shall not apply to any winding up petition which is frivolous or vexatious and is discharged or stayed or dismissed with fourteen [14] calendar days of commencement.“Insolvent” means—[a] the Entity—
a. is unable to pay debts as they fall due; b. is deemed to, or is declared to, be unable to pay its debts under applicable law; c. suspends or threatens to suspend making payments on any of its debts; or d. by reason of actual or anticipated financial difficulties, commences negotiations with one or more creditors with a view to rescheduling its indebtedness;
[b] the value of the assets of the Entity is less than its liabilities taking into account contingent and prospective liabilities; or [c] a moratorium is declared in respect of the indebtedness of an Entity. “Issuer” means the Entity responsible for the issuance of a Virtual Asset. “Licence” means a licence granted by VARA to an Entity under which VARA explicitly authorises such Entity to carry out one or more VA Activity[ies] in the Emirate. “Licensed” means having a valid Licence. “Market Conduct Rulebook” means the Market Conduct Rulebook issued by VARA pursuant to these Regulations, as may be amended from time to time. “Market Manipulation” has the meaning ascribed to it in Regulation VIII.H.1. “Market Offences” has the meaning ascribed to it in Regulation VIII.A.1. “Market Sounding” has the meaning ascribed to it in Regulation VIII.G.1. “Professional Exemption” has the meaning ascribed to it in Regulation IV.A.5. “Regulations” means these Virtual Assets and Related Activities Regulations 2023, as may be amended from time to time. “Responsible Individuals” has the meaning ascribed to it in the Company Rulebook. “Rule” means a rule issued by VARA under these Regulations which have binding effect. “Rulebook” means a rulebook issued by VARA containing Rules and/or Guidance, as may be amended from time to time. “Supervisory Authority” has the meaning ascribed to it in the Federal Decree-Law No. [20] of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organisations. “Technology and Information Rulebook” means the Technology and Information Rulebook issued by VARA pursuant to these Regulations, as may be amended from time to time. “UAE” means the United Arab Emirates. “UAE-CBDC” means any digital currency issued by the CBUAE. “UAE FIU” means the UAE Financial Intelligence Unit. “Ultimate Beneficial Owner” or “UBO” has the meaning ascribed to it in the Company Rulebook. “Unlawful Disclosure” has the meaning ascribed to it in Regulation VIII.D.1. “VA Activity” means the activities listed in Schedule 1 of these Regulations, as may be amended from time to time. “VA Issuance Rulebook” means the Virtual Asset Issuance Rulebook issued by VARA pursuant to these Regulations, as may be amended from time to time. “VARA” means the Dubai Virtual Assets Regulatory Authority. “VASP” means an Entity Licensed by VARA to carry out VA Activity[ies] in the Emirate. “Virtual Asset” or “VA” has the meaning ascribed to it in the Dubai VA Law. “VA Wallet” has the meaning ascribed to the term “Virtual Asset Wallet” in the Dubai VA Law. “Working Day” means any day which is not a weekend or public holiday in the Emirate. Marketing Regulations
All market participants, whether licensed by VARA or not, must adhere to the Marketing, Advertising and Promotions regulations. VASPs, businesses offering non-virtual asset activities and individual market participants should be aware of the penalties for non-compliance.
You can download these documents by following the links below:
- Regulations on Marketing, Advertising and Promotions related to Virtual Assets- Administrative Order No 01/2022
- Penalties for Non-Compliance- Administrative Order No 02/2022
Businesses are not permitted to offer regulated virtual assets services or activities in Dubai without receiving VARA approval or confirmation of no objection.
Administrative Order No. 01/2022
Administrative Order No. 02/2022
Guidance on the Regulations on the Marketing of Virtual Assets and Related Activities 2024
Introduction
The Dubai Virtual Assets Regulatory Authority [VARA] was established and authorised by Law No. [4] of 2022 Regulating Virtual Assets in the Emirate of Dubai [Dubai VA Law] to regulate Virtual Assets and Virtual Asset Service Providers [VASPs].
This Guidance on Regulations on the Marketing of Virtual Assets and Related Activities 2024 [this Guidance on Marketing Regulations] is issued pursuant to the Virtual Assets and Related Activities Regulations 2023 [the Regulations] and the Regulations on the Marketing of Virtual Assets and Related Activities 2024 [the Marketing Regulations].
The purpose of this Guidance on Marketing Regulations is to provide guidance on the application of the Marketing Regulations, including, but not limited to, when the Marketing Regulations apply, general requirements applicable to all Marketing and the exemptions which are available. This guidance is provided both by way of indicative examples and explanations of phrases which have specific meanings in the Marketing Regulations.
As per Regulation I.B.4, all Guidance is indicative and non-binding, and may comprise any information as further elaboration or explanation on the application of Regulations, or any Rules or Directives only. This Guidance on Marketing Regulations is not a substitute for the Marketing Regulations or independent legal advice. Readers are encouraged to read this Guidance on Marketing Regulations together with the Marketing Regulations, to aid their understanding of the scope and application of relevant provisions.
Capitalised terms in this Guidance on Marketing Regulations have meanings defined herein or as defined in Schedule 1.
I. Guidance by Topic
No.
Marketing Regulation
Topic Guidance 1.
I.A.1
I.A.2“advertisement, inducement, solicitation, offer or promotion” The scope of terms which define Marketing are intended to be sufficiently broad in order to cover all forms that Marketing may take.
Readers should note that the list in Marketing Regulation I.A.2 only aims to provide examples of communications and activities, which may qualify as Marketing however the list is non-exhaustive.
VARA will take all relevant circumstances into consideration when assessing whether a communication or activity qualifies as Marketing, including, but not limited to:
• the content; • the target audience; • how the communication or activity is publicised or otherwise made available; • the relevance between the communication or activity, and a Virtual Asset and/or a VA Activity; • whether there is a commercial purpose behind the communication or activity; • the intents[s] and/or objective[s] behind the communication or activity; and • VARA's objectives as a regulator.
2.
I.B.1 and throughout
“in or targeting the UAE” Below is a non-exhaustive list of factors that VARA may consider in determining whether a campaign or any Marketing is "in or targeting the UAE". Not all factors need to be present for Marketing to be deemed "in or targeting the UAE" and, likewise, the absence of any one factor does not mean a campaign will not be deemed to be in the UAE, or be targeting the UAE.
• Any element of the overall campaign is in the UAE, including, but not limited to, advertisements on any physical structures, local newspapers, mail, broadcast [whether online or through other channels], or any physical event; • Campaigns targeting member states of the Gulf Corporation Council [GCC] as a whole will by default be deemed to include the UAE; • Campaigns that select the GCC/UAE as a location; • UAE specific press related to the campaign; • AED is used as the denominator currency or one of the denominator currencies in Marketing materials; • Campaigns with Emirati Arabic dialect or uses local slang, 'in words' or phrases [either in English or Arabic]; • Campaigns using UAE and/or Dubai imagery [including, but not limited to, the UAE flag, Dubai skyline]; • Campaigns using UAE celebrities or famous individuals with large influence base/followings in the UAE; • Any Marketing in public areas in the UAE; • Maintaining any communication channels which target UAE residents [e.g. chatrooms or social media pages]; • Promotional plan[s] specifically addressing/intending to target the UAE; and/or • Restrictions [if any] that have been put in place to prevent or restrict UAE residents from accessing Marketing materials [e.g. geoblocking of websites or advertising campaigns].
VARA will assess whether Marketing is "in or targeting the UAE", in the context of the overall campaign in which it is carried out. All campaigns will be considered as a whole in terms of the channels used and the content of all materials.
For example, an advertisement shown in search engine results may be considered as part of the same campaign as an advertisement on a physical billboard if they are linked in any way, such as the time period during which they are carried out, or if they contain the same or similar content or themes.
The UAE is used in this context, as opposed to the Emirate of Dubai only, because VARA deems any Marketing that targets the UAE to, by default, be targeting Dubai. This is because VARA does not view it as likely that a campaign or any Marketing can target the UAE and adequately carve out Dubai – unless it is explicitly specified in every communication, which may be reviewed and proven on a case by case basis.
3.
I.C.2.a
“fair, clear and not misleading” The purpose of requiring Marketing to be “fair, clear and not misleading” is to allow industry participants and investors to make informed decisions based on Marketing materials. VARA will consider the overall impression given to the audience when assessing whether a particular instance of Marketing is “fair, clear and not misleading”.
How this requirement applies would depend on the nature and overall context of the Marketing. For example, memes or short videos may constitute Marketing and how these can be presented in a way which is “fair, clear and not misleading” will be very different compared to how long form articles can comply with the same requirement.
Generally, the following principles should be taken into consideration when designing Marketing materials:
Plain language:
Marketing should use plain language that is easily understood by the target audience. Clear and concise language is likely to enhance the transparency and effectiveness of the communication.
Clearly legible or audible:
Marketing in written form should be easily legible or, in the case of oral communications, clearly audible. In particular, information which may be material to the target audience’s understanding of the nature and risks of a product or service must be clearly communicated.
Proportional:
The “fair, clear and not misleading” requirement should be assessed in a manner which is proportionate to the means of communication, content, target audience and/or the nature of the product or service being promoted. Different audiences may require variations in the content and presentation of the Marketing materials, for instance Marketing addressed to broad retail clients may need to include more information on potential risks of investments.
Balanced picture:
Marketing materials should provide a balanced impression of the product or service being promoted, so that recipients can make informed investment decisions. For example, Marketing materials should not emphasise or exaggerate potential benefits or investment returns without indicating relevant risks and should not omit or obscure important information, statements, or warnings.
If a comparison between a product or service and its competitors is included, it should be presented in a fair, balanced, and meaningful manner. Misleading or biased comparisons should be avoided.
Clarity on regulatory status:
Marketing should clearly state the regulatory status of any product, service and/or platform involved, whether in the Emirate of Dubai or, if applicable, other jurisdictions. This includes not containing messages which may mislead the public with regards to a business’s licensing status or scope of regulated activities.For example, a person must not present VARA’s approval of the issuance of a Virtual Asset as a regulator’s endorsement of the quality of the Virtual Asset or its issuer.
4.
I.C.2.b
“clearly identifiable as marketing or promotional in nature” Marketing should be obviously identifiable as such, with a clear commercial intent. If it is not obvious from the context that it is promotional in nature, it should include wordings such as “ad”, “advertisement”, or “advertisement feature”, or “promotional/sponsored content” in a prominent place.
For example, large billboard advertisements in public areas, will be viewed as being obviously identifiable as promotional in nature without the need for additional wording as it is widely understood by the public that such areas are used for advertisements.
However, social media posts can include both promotional and non-promotional content and as such must be identified as Marketing.
5.
I.C.2.k
“clear and prominent indication that such content was posted, publicised or otherwise presented as part of a remunerated arrangement” Marketing should generally satisfy the below if it is posted, publicised or otherwise presented as part of a remunerated arrangement.
• For any sponsored content, to clearly state that the content is sponsored, along with the name of the sponsor [if the sponsor is not readily identifiable from the content] [e.g. “sponsored content”, “sponsored by ABC VASP”, “paid content brought to you by ABC VASP”, “in paid partnership with ABC VASP”] in a prominent place of the content [e.g. next to the heading of the content]. • For any social media post which is a paid advertisement, to ensure that the post is clearly labelled and obviously identifiable as advertising by including wordings such as “ad”, “advertisement”, “promoted” or “sponsored” [or hashtags of such terms] in a prominent place of the post. • The abovementioned wordings or hashtags must be legible and easy to identify when viewing the content as a whole and on different types of devices [e.g. desktop, mobile or other devices].
Remunerated arrangements include any form of monetary or non-monetary remuneration, as well as other value in kind.
6.
I.C.2.l
“monetary or non-monetary incentive” Below is a non-exhaustive list of offers which may qualify as monetary and non-monetary incentives. These include offers of:
• incentives when investing in a Virtual Asset for the first time, or signing up for an Entity’s service provided as part of any VA Activity for the first time; • incentives where the client refers another Entity to invest in a Virtual Asset or use an Entity’s service provided as part of any VA Activity; • special offers when investing a particular amount in Virtual Assets; • offer of gifts or other incentives once an investment in a Virtual Asset has been made or once an Entity has signed up for an Entity’s service provided as part of any VA Activity; or • offer of gifts or other incentives for making additional investments when already using a product and/or service.
Non-monetary incentives do not include information and/or research tools.
Monetary or non-monetary incentives should be made available for an adequate period of time so that they do not create a sense of urgency for recipients of Marketing to acquire Virtual Assets and/or use services as part of any VA Activities in anticipation of future appreciation in value or profits, or create a fear of missing out on future appreciation in value or profits due to inaction, in compliance with Marketing Regulation I.C.2.h.
A monetary or non-monetary incentive should not be used or presented in Marketing in a way that it is likely to divert or mislead the viewers’ focus from the proper consideration of a product or service being marketed, including any actual or potential risks associated with such product or service. For example:
• the description or image of an incentive in the Marketing should not be given excessive prominence in the overall presentation of Marketing. In particular, the risk disclosure or disclaimer to be included in the Marketing should not be overshadowed by the description or image of an incentive in the Marketing. • if any monetary incentive is being offered [e.g. any bonus or discount] the offer must also include information on the ongoing charges that will apply after the incentive period has ended, and such information must be given similar prominence and in close proximity to the information about the monetary incentive in the Marketing.
7.
I.C.3.b/
I.D.1.c/
I.D.1.e/
I.D.2.b/
I.D.2.d/
I.F.1.d“prominent disclaimer” Prominent generally means unmissable – i.e. is easily seen or heard, and is likely to attract the attention of the viewer. Prominence of certain wordings/images in the content of Marketing will require to be adapted to size, colour or position of the wordings/images in the overall content.
A disclaimer or any other indication to be included in Marketing as required by the Marketing Regulations should comply with the following in order to satisfy the “prominent” requirement, depending on the nature of the Marketing:
• the disclaimer/indication is legible or audible, and easy to spot [i.e. not written in small font sizes or unclear type styles, or being in a colour which blends with the colour of the background, languages which are not commonly understood in the market, playback speeds which are too quick to be understood]; • the size of the disclaimer/indication is proportionate, taking into account the content, size and orientation of the Marketing as a whole; • the positioning of the disclaimer/indication is not outside of, or distant from, the main content of the Marketing; • the disclaimer/indication should not be obscured through the close proximity of promotional and/or other content in the Marketing; and • available for a sufficient period of time given the overall context of the Marketing, for example long form audio content should consider repeating the disclaimers/indications at both the start and end, while video content should consider a running ticker throughout the duration of play.
8.
I.C.3.d
“prior consent or expression of interest” Consent would include valid consent under existing data protection laws, which allow for Marketing.
An expression of interest is intentionally broader than consent to allow for other ways in a wide range of cases where prior consent may be practicable, yet this requirement can be met, for example using a particular DLT or other technology, being a member of a group within a closed network etc.
9.
I.D.1
“in its capacity as a journalist” Journalists for the purpose of the Marketing Regulations shall include:
1. media personnel [content creators and/or presenters] that are duly licensed by the Media Regulatory Office of the UAE; and 2. foreign media correspondents that are duly accredited by the Media Regulatory Office of the UAE.
“Key opinion leaders” and/or influencers are not regarded as journalists and do not qualify for consideration under the journalistic exemption.
10.
I.D.1.b/
I.D.2.a“overall purpose” VARA will assess the overall purpose of content to determine whether it qualifies for the respective exemption, or whether the content is Marketing.
In doing so, VARA will consider whether the content taken as a whole – including any promotional material contained in it – including merchandise and/or give-aways at events, charities, ceremonies etc. – is for the promotion of any Virtual Asset or service provided as part of a VA Activity or the VASP.
In assessing the overall purpose of the content, VARA will also consider the overall impression of the content in light of the publication, broadcast or website [or any other medium] under which the content is published and disseminated. For example, VARA may consider all the contents of a publication, broadcast or website [or any other medium], including any features such as chatrooms, advertisements or other promotional material, in assessing the principal purpose of a particular content published under such publication, broadcast or website [or any other medium].
11.
I.D.1.c/ I.D.2
“nature of the author Entity’s interest” The disclaimer should contain the following information in relation to the Virtual Asset, VA Activity and/or VASP to which the content relates, as applicable:
• type and/or name of the interest [e.g. ownership of a Virtual Asset]; • if the interest is any form of business, advisory, and/or professional arrangement, details of such arrangement [e.g. the position held by the author Entity and the name of the VASP that has engaged the author Entity; any membership/board or advisory capacity/partnership with shareholding in the VASP which is the subject of the content]; and • if the interest is a potential benefit or avoidance of loss, details of such potential benefit or how a loss may be avoided.
Examples of permissible disclaimers are set out below:
• “[Name of an Entity], the author of the content, owns a fair share of [VA Name] – X% relative to all other assets in portfolio.” • “[Name of an Entity], the author of the content, is the Chief Operational Officer of [Name of the VASP which is the subject of the content].” • “[Name of an Entity], the author of the content, is the co-organiser of the [Event Name] along with [Name of the VASP which is the subject of the content].”
Please also see guidance on “prominent disclaimer” in item no. 7, above.
12.
I.D.2
“educational content” Educational content generally means content which is purely educational and for informational purposes only without the intention of leading the recipients to engage in the activity of investing in a Virtual Asset or signing up for a service provided as part of a VA Activity.
Educational content which does require buying a Virtual Asset for use, or using a service provided as a VA Activity, at any stage, should limit these to where they are necessary and provide multiple options, or explain that multiple options are available, where possible.
Content which is sponsored or paid for in return for any monetary or non-monetary benefit for the author Entity will not qualify as “educational content”.
Readers are reminded that educational content must still include prominent disclaimers where they are required in the Marketing Regulations, as applicable.
13.
I.D.3
“purely personal or private communications” Communications which would be considered purely personal or private will only include friends, family or colleagues.
Any communications which are accessible by fifty [50] individuals or more in aggregate, whether directly or indirectly, would not be considered personal or private. Communications which are accessible by fewer than fifty [50] individuals may still be considered as Marketing, and not deemed to fall within this exemption.
II. Illustrative Examples
Purpose
The illustrative examples and case studies in this Part II aim to contextualise the application of the Marketing Regulations and the guidance in Part I. Readers should note that these examples and case studies have been designed to highlight certain issues and considerations relevant to the Marketing Regulations and there may be regulatory issues in these examples and case studies other than those explained which are not mentioned [e.g. whether certain non-Marketing activities require a VARA licence].
All of the following examples and case studies are made up and provided for illustration purposes only.
All names, graphics and descriptions in the following illustrative examples are fictional and provided for illustrative purposes only. No identification with actual Virtual Assets, Entities, Marketing campaigns, products, and/or services is intended or should be inferred or implied.
A Examples of Marketing content in breach of general requirements
The examples of Marketing content below are all in breach of the general requirements under Marketing Regulation I.C.2.
1. Television advertisement
Figure [1]: Screen capture of television advertisement
NOT COMPLIANT: Suggesting returns are guaranteed.
The above is a screen capture from a 30-second television advertisement by ABC VASP. “Looking for crypto investments which are #UPONLY” and “…best coins which will moon in 2024” are both messages which suggest that ABC VASP can provide guaranteed returns on its clients’ investments.
This advertisement is therefore in breach of Marketing Regulation I.C.2.e, which prohibits all Marketing from stating or implying that investment returns are guaranteed.
Figure [2]: Screen capture of disclaimer in television advertisement
NOT COMPLIANT: Disclaimer does not contain the information required.
At the end of the same television advertisement as the one in Figure [1], the visual in Figure [2] above is shown for three seconds.
As shown in Figure [1], the advertisement refers to VA1 specifically and therefore contains Marketing relating to a Virtual Asset. Marketing Regulations I.C.3.b and I.C.3.c provide that Marketing of or relating to, Virtual Assets must:
[i] include a prominent disclaimer that Virtual Assets may lose their value in full or in part and are subject to extreme volatility; and [ii] state clearly that the owner and/or investor in the Virtual Asset can lose all the money or other value they invest and do not benefit from any form of financial protection.
Assuming there are no other disclaimers in the television advertisement, the message “Not financial advice. DYOR.” would not be sufficient for compliance with Marketing Regulations I.C.3.b and I.C.3.c as it does not include the specific messages required.
The following updated disclaimer would comply with the above requirements: “Not financial advice. Crypto is highly volatile and may drop in value significantly. You may lose the amounts you invest and your investments do not benefit from any form of financial protection.” This disclaimer must also be displayed prominently in relation to the Marketing content [see guidance on “prominent disclaimer” in Part I of this Guidance on Marketing Regulations].
2. CEO Online Q&A
Figure [3]: Screen capture of webpage showing CEO Q&A hosted by ABC VASP
NOT COMPLIANT: Suggesting investment decisions are trivial, simple or easy without reference to risk of loss.
ABC VASP hosted an online Q&A with its CEO answering questions submitted by the community. The webpage is publicly accessible [i.e. no registration or sign up required].
It is apparent that the main message in the CEO’s response is to “pitch” ABC VASP to individuals who “don’t know anything about crypto”. This qualifies as Marketing.
Provided that all details are accurate, fair, clear and not misleading then the CEO’s description of features of the service, such as “No minimum investments” and “start investing in minutes”, are permissible.
However, the message of “zero effort for unlimited upside” does not satisfy the requirements of the Marketing Regulation I.C.2.f that Marketing must not imply that investment decisions are trivial, simple, or easy. It is also inconsistent with the fact that investments may lose their value [Marketing Regulation I.C.2.c].
Overall, this Q&A response does not present a balanced picture of the potential risks and returns involved in investing in Virtual Assets or using ABC VASP’s services.
3. Billboard Advertisement
Figure [4]: Billboard advertisement displayed in public areas in Dubai
NOT COMPLIANT: Implies past performance guarantees future results and creates an urgency to acquire VA1.
ABC VASP has put up the above billboard advertisement in various public areas in Dubai. The contents of the billboard advertisement are in breach of the following Marketing Regulations:
[i] Marketing must not state or imply that past performance of investments guarantees or is indicative of future results [Marketing Regulation I.C.2.g]; and [ii] Marketing must not state or imply an urgency or create a fear of missing out on future appreciation in value or profits due to inaction [Marketing Regulation I.C.2.h].
4. References to past performance [Marketing Regulation I.C.2.g]
The billboard advertisement suggests the value of VA1 may go up by “100x”, as it had previously done so.
If Marketing content refers to the past performance of a Virtual Asset, it should at least include statements similar to the following to ensure that the reference is balanced out by appropriate qualifications:
[i] “The above information refers to the past performance of VA1 and is not a reliable indicator of its future performance.”; or [ii] “Investments can go up and down. Past performance is not necessarily indicative of future performance.”
Such statements should be presented legibly in the main part of the Marketing content in a font size that is easily read and in close proximity to the information about past performance.
The Marketing content should also clarify that any references to the past performance of a Virtual Asset does not guarantee or is indicative of future results.
5. Implying an urgency or creating a fear of missing out [Marketing Regulation I.C.2.h]
The billboard advertisement also calls for the audience to not “miss out on its bull run this time”. Such statement is clearly designed to create a fear of missing out on future appreciation.
Any messages of this nature should be presented in a balanced manner. This may include showing statements regarding the importance of careful consideration before signing up for, or using, a VASP’s service and that Virtual Assets may lose their value.
Given the Marketing content is presented in the form of a billboard advertisement and that the target audience will not be able to read its content in detail, it is very unlikely that the necessary messages and disclaimers would be able to be presented in balanced manner in the overall context of the Marketing. As such, these messages may be better suited to other media or channels which are considered by recipients for a longer period of time. Entities carrying out Marketing should always carefully consider whether a particular medium or channel is suitable for a particular message.
B Case Study – Physical Events and Trade Shows in the Emirate
1. Event organiser
An event organiser is planning to set up a virtual assets exhibition, convention, seminar or conference [or any form of B2B/B2B2C event] held in the Emirate, which aims to bring together global leaders in the virtual asset industry, investors, and technology enthusiasts. In preparation of the event, the organiser should make sure that it complies with applicable requirements in the Marketing Regulations, including, but not limited to, Marketing Regulation I.F.2.
For example, the event organiser should:
[i] Ensure that all attendees are suitable and/or qualified to attend the event, depending on the nature and focus of the event [e.g. the audience for a virtual assets event focusing on institutional investment opportunities should be very different from a hackathon]; and [ii] ensure it can, upon request, demonstrate to VARA how it complies, or has complied with, all requirements applicable to event organisers in the Marketing Regulations.
2. Event exhibitors
During the event, exhibitors may engage with potential clients and investors in many ways. It is not always clear that these practices are promotional in nature or have a “marketing” element. Below are some examples of common practices at events and trade shows, and related implications in the context of the Marketing Regulations:
a. Booth presentations
Exhibitors may set up booths to showcase their platforms, products, and services. These may include products and services that constitute VA Activities regulated by VARA. The booths utilise visually appealing displays to attract attendees [e.g. large logos of the business and Virtual Assets].
Figure [5]: Booth of ABC VASP at a virtual asset event in Dubai
Key considerations: If an exhibitor is not Licensed by VARA, it should be careful when designing booth presentations to only present its name, logo, and types of activities provided, in accordance with Marketing Regulation I.F.1.
All Marketing conducted by Entities not Licensed by VARA should also include a prominent disclaimer that they are not Licensed or regulated by VARA, and hence not permitted to conduct VA Activities in the Emirate of Dubai.
Exhibitors that are not Licensed by VARA must also ensure they do not permit any residents of the UAE to sign-up, or onboard as a client, at the event [Marketing Regulation I.F.1.b].
Staff manning the booth should be reminded and trained on such requirements, in particular not to assist or solicit event attendees in signing up to its platform or onboarded as a customer [Marketing Regulation I.F.1.a] or make false claims about the licensing status of the exhibitor [whether under VARA or in other jurisdictions].
b. Panel discussions and presentations
Exhibitors may arrange for representatives to participate in panel discussions or deliver presentations throughout the event to share insights, industry trends, and the benefits of their platforms or services. These discussions and presentations may also be streamed online with various overlays [e.g. logos of event sponsors].
Figure [6]: Panel discussion at a virtual asset event in Dubai
Key considerations: Participation in panel discussions and presentations would not be in breach of the Marketing Regulations, however the discussions should focus only on providing informative content and knowledge. Speakers are permitted to explain the features or provide other information about a product or service, but must not make any recommendations with respect to any product or service or Virtual Asset.
c. Branded merchandise and stationery
Branded merchandise and stationery, such as USB drives, pens, power banks, and articles of clothing/lifestyle are often distributed by exhibitors at events to increase brand visibility and for engagement with event attendees – including at charity events.
Figure [7]: Branded stationery handed out by a VASP at an event in Dubai
Key considerations: Promotional giveaways may be a form of non-monetary incentive. If these are used in the context of Marketing, they must not be used in such a way that they are likely to divert or mislead investors’ focus from the proper consideration of the product or service being promoted, as required under Marketing Regulation I.C.2.l.i [also see VI. Case Study – Incentives].
Generally, the lower the monetary value of the incentive offered, the more likely it is for the distribution of the incentive to be compliant with Marketing Regulation I.C.2.l.i and the above are all examples of permissible materials.
However, exhibitors should note that only handing out branded merchandise as an incentive to individuals to sign up to their platform is not compliant with Marketing Regulation I.C.2.l.i, as those individuals may be incentivised by the freebies to sign up, without giving proper consideration of the product or service offered by a particular exhibitor.
Exhibitors should also note that virtual asset airdrops at events may qualify as Marketing of, or relating to, a Virtual Asset, and therefore subject to certain rules in the Marketing Regulations as described below.
d. Promotions of virtual assets
Exhibitors may use virtual assets to promote themselves during an event, such as by handing out flyers with QR codes that allow NFTs to be minted insofar as they comply with the conditions below.
Figure [8]: Pamphlet handed out at a virtual asset event in Dubai
Key considerations: Such promotions would qualify as Marketing of, or relating to, a Virtual Asset and must therefore comply with Marketing Regulation I.C.3.
These requirements include seeking prior consent or expression of interest from the owner of the VA Wallet to the receipt of the Virtual Assets prior to any transfer. In this example, the recipient would need to take the action of scanning the QR code and click a condition that confirms his/her interest to receive the free NFT, in order to satisfy the requirement of an expression of interest.
Marketing Regulation I.C.3 also requires appropriate disclaimers to be made. This may be done by including statements on accompanying materials, such as a disclaimer on the pamphlet on which the airdrop QR code is displayed and/or on any relevant websites. As there is no disclaimer on the pamphlet in Figure [8], the webpage to which the QR code is linked must display a relevant disclaimer.
Entities in the UAE that issue any Virtual Asset must ensure they comply with all applicable Rules in the VA Issuance Rulebook.
e. Distribution of Marketing materials
Exhibitors may distribute various Marketing materials at the event venue or at satellite events. These include brochures, whitepapers, or newsletters.
Key considerations: The exemption in Marketing Regulation I.F which allows for Entities that are not Licensed by VARA to carry out Marketing of or relating to Virtual Assets or VA Activity is limited to physical events in the Emirate. Exhibitors must therefore ensure that they do not distribute such materials outside of the event, e.g. outside the event or after the event has ended.
f. Demonstrations and workshops
The event may host live demonstrations or interactive workshops to showcase the functionality and benefits of Virtual Assets and/or DLT. These sessions aim to educate attendees and provide hands-on experiences.
Key considerations: Demonstrations and workshops can comply with the Marketing Regulations if they focus on providing educational content and demonstrating the features and capabilities of Virtual Assets, a service and/or DLT. These sessions should not require attendees to sign up to use any particular service or acquire any Virtual Assets – i.e. no database of the attendees should be collected for future marketing/promotions/sales purposes.
C Case Study – Journalistic Content
Below is a news report published by DubaiCryptoReporter, a fictional news website operating in Dubai. For the purposes of this case study, assume: [i] DubaiCryptoReporter is appropriately licensed in the UAE to operate an online news and media service with a focus on the virtual assets industry; and [ii] no other licences are required by DubaiCryptoReporter to operate its platform and publish the article in Figure [9] below.
Figure [9]: Online news article published by DubaiCryptoReporter
COMPLIANT: Overall purpose is clearly not marketing.
It is apparent that the overall purpose of this article is to report on the fact that ABC VASP has received a Licence from VARA to provide Exchange Services in Dubai. Although there are references to ABC VASP’s service offerings and the VA1 which is listed on the exchange, these serve to provide additional context, rather than to market or promote ABC VASP or the VA1. This article therefore falls within the journalistic exemption in Marketing Regulation I.D.1.
At the end of the article, the following disclaimer is displayed in the same font as the main body of the article:
Figure [9a]: Disclaimer in online news article published by DubaiCryptoReporter
COMPLIANT: Prominent disclaimer of author’s holding of a virtual asset, as well as volatility and risk of total loss.
Marketing Regulation I.D.1.c and I.D.1.e set out the following disclaimer requirements for journalistic content:
[i] explanation of the nature of the author’s interest in any Virtual Asset, VA Activity and/or VASP to which the content relates; and [ii] if the content refers to the purchase of a Virtual Asset, a disclaimer that Virtual Assets may lose their value in part or in full and are subject to extreme volatility at times.
In terms of presentation, disclaimers should be shown in a form equal to or more prominent than the form of the content itself [see guidance on “prominent disclaimer” in Part I of this Guidance on Marketing Regulations].
The text in the green box in Figure [9a] is an example of a compliant disclaimer.