Dubai regulators enforce new rule that mandates crypto marketers add risk disclaimer

A new rule by the United Arab Emirates Virtual Asset Regulatory Authority will require cryptocurrency companies to include a disclaimer warning potential customers about the risks that come with investing in digital assets.

Starting October 1, companies wishing to market their digital assets in the UAE will have to include a warning on their products stating that “virtual assets may lose all or part of their value and may be subject to extreme volatility,” Bloomberg reported.

The updated marketing guidelines for virtual assets require companies providing incentives for virtual assets or related products in the UAE to obtain compliance approval from VARA.

For example, they must be able to demonstrate that the bonus will not be used to “create or mislead” investors into properly assessing the risks associated with the investment product.

VARA Chief Executive Matthew White hopes that “providing clear and actionable guidance” can ensure virtual asset service providers can build trust and transparency when operating in the UAE.

In recent years, Dubai has become one of the most favorable cities for crypto marketers thanks to its crypto-friendly tax regulations and huge venture capital investment prospects.

A report published by Bitget Research revealed that an average of 500,000 crypto traders will reside in the Middle East by 2024. This number is expected to skyrocket to 700,000 by the end of the year.

In a significant decision made by a Dubai court last month, cryptocurrency was accepted as a valid form of payment within the scope of business contracts.

In October 2023, the United Arab Emirates launched the RAK Digital Assets Oasis, the region’s first economic free zone that hosts cryptocurrency, web3, blockchain, and artificial intelligence. The zone offers a business-friendly regulatory environment with tax benefits.

As of March 2024, more than 100 entities, including Indian cryptocurrency exchange CoinDCX, have received licenses to operate on the RAK DAO.