VARA issues regulations governing virtual assets marketing

Furthering its commitment to a responsible Future Economy, Dubai sets market assurance, and consumer protection guardrails for the VA sector.



Wam photo
Wam photo
by

Sandhya D'Mello

Published: Thu 25 Aug 2022, 8:45 PM

Last updated: Fri 26 Aug 2022, 6:00 PM

The world's only independent regulator for Virtual Assets (VA), Dubai’s Virtual Asset Regulatory Authority (VARA), has launched operations for its customised licensing regime this month.

With the commencement of its Minimum Viable Product (MVP) Phase, VARA on Thursday announced regulatory guidelines on marketing, advertising and promotions of VA across Dubai.

Guidance reflects VARA’s objective to provide a progressive framework that can enable borderless economic opportunity, without compromising market security, across the global Virtual Assets industry.

As part of its commitment to nurturing responsible industry participation, these regulations specifically address marketing and communications activities, ahead of operationalising the MVP licensees so that any mass-market information dissemination, and consumer solicitation are designed to safeguard community interests.

Regulations on marketing, advertising and promotions of VA cover all forms of outreach, communications and advertising, including publication of information, awareness building, customer engagement, and/or investor solicitation.

VARA rules extend to VA related communications by any entity leveraging Dubai-based media sites, search platforms, and online or off-line publishing channels that explicitly target customers within the Dubai market, establishing guardrails on permissible audience segments, in addition to content obligations.

Equally all content dissemination channels operating from Dubai are obligated to act responsibly, and ensure compliance with prevailing Guidance as it pertains to VA communications facilitated via their platforms

Guidelines further detail the obligations of Dubai licensed VASPs and any advertising platforms that are positioning VA content across traditional and new-age media channels for the Dubai market, to ensure factual accuracy, explicitly demonstrate any promotional intent, and in no way mislead on the guaranteed nature of their returns.

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

This marks a next step in global VA ecosystem innovation, targeting safe market adoption, and encouraging credible industry participation to drive sustainability of Virtual Assets as an anchor in the future economy.

Kokila Alagh, founder at KARM Legal Consultants.
Kokila Alagh, founder at KARM Legal Consultants.

"The VARA has identified an aspect of extreme importance and sensitivity for the virtual assets industry. Marketing and promotions are the first point of contact between end users and VASPs, and these determine whether the user will engage with the service or not. It is imperative for users to have accurate and full details to make an informed decision as to their VA exposure. These regulations will go a long way in ensuring that users have the needed information before making their decisions," said Kokila Alagh, founder at KARM Legal Consultants.

The Web 3.0 Dubai community welcomed the new regulations as it reflects on long-term commitment.

Faisal Zaidi, Co-Founder and CMO, Crypto Oasis.
Faisal Zaidi, Co-Founder and CMO, Crypto Oasis.

"We welcome the latest announcement by VARA, as it increases the regulatory certainty in Dubai. Traditional media remains the major source of information for most consumers. Globally and in the UAE, this space has been used by many organisations to their advantage. This announcement will ensure companies in the virtual assets sector act appropriately, it will help VARA regulate communications to enforce responsibility, and protect consumers and investors. Wide-scale adoption of decentralised technologies requires progressive policy-making, especially as the number of blockchain organisations increase in the Crypto Oasis. Future-minded regulators like VARA are the key to the success of this growing ecosystem, " said Faisal Zaidi, Co-Founder and CMO, Crypto Oasis.

Atul Hegde, founder, YAAP.
Atul Hegde, founder, YAAP.

Ecohing similar sentiment, Atul Hegde, founder, YAAP, said: "This is indeed a welcome move by VARA. The fact that we will now have well defined guidelines that both protects consumer interests and gives publishers benchmarks to follow will encourage more brands to explore VAs as a serious form of marketing . Historically we have seen with other mediums whenever regulatory bodies have stepped in proactively to define frameworks it has always been a catalyst of growth for that medium. This move augurs well for Dubai’s ambitions of being among The top global destinations for cryptos, blockchain and the metaverse."

Christian Chalfoun, CTO, Colossal Bit.
Christian Chalfoun, CTO, Colossal Bit.

Similarly, Christian Chalfoun, CTO, Colossal Bit, said: "Its a very very positive thing that VARA has announced because we have been suffering in the Virtual Asset space with many scams and many misleading articles and advertisements. Dubai is very well-known for enforcing their authority and regulating publishing in online publications. This will help to make the environment much safer, and more compliant, not only in Dubai, but it will also spread to the rest of world. They are asking that everyone who is advertising should act responsibly and ensure compliance with their guidelines. Just recently we had a case of a person who was posting promotional content about projects in the virtual space, but not mentioning that he is getting money to promote these assets. So with these guidelines in place, it will avoid such misleading messaging."

— sandhya@khaleejtImes.com


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