September was a busy month for the Virtual Assets Regulatory Authority (VARA), Dubai’s virtual assets regulator.
Cooperation Agreement with SCA
On September 9th, 2024, the UAE’s Securities and Commodities Authority (SCA) and VARA entered into a cooperation agreement to enhance cooperation between the two regulators in the virtual assets (VA) sector. Pursuant to this agreement, virtual asset service providers (VASPs) operating in or from Dubai are required to obtain a license from VARA further to which they can be registered by default with SCA to service the UAE as a whole. However, VASPs intending to operate out of another Emirate than Dubai must apply for an SCA licence. The agreement also outlines the mechanism for mutual supervision of VASPs, penalty and fine imposition, information and data sharing, as well as cooperation in employee training and qualification.
New Marketing Regulations
Later in the month, VARA published new Regulations on the Marketing of Virtual Assets and Related Activities of 2024 (the Marketing Regulations) and related Guidance on Regulations on Marketing of Virtual Assets and Related Activities 2024 (the Guidance on the Marketing Regulations).
When will the Marketing Regulations come into force?
The Marketing Regulations come into force on 1st October 2024 and supersede and replace the Administrative Order No. (01) of 2022 Relating to Regulation of Marketing, Advertising and Promotions Related to Virtual Assets (the Administrative Order No. (01) of 2022) and related Administrative Order No. (02) of 2022.
Is there a transitional period for entities that have received VARA approval under Administrative Order No. (01) of 2022 for their marketing activities?
Entities that received VARA approval under Administrative Order No. (01) of 2022 will have a 90-day transitional period to comply with the new Marketing Regulations.
What is the scope of the Marketing Regulations?
The Marketing Regulations apply to all marketing of or relating to VA or VA activities “in or targeting the UAE”. Although VARA’s jurisdiction is confined to Dubai, it has clarified that any marketing aimed at the UAE is presumed to be targeting Dubai unless proven otherwise.
The Guidance on Marketing Regulations includes a non-exhaustive list of factors that VARA may consider in determining whether a campaign or any marketing is “in or targeting the UAE" such as the use of the AED as the denominator currency, use of the Emirati dialect or the involvement of UAE celebrities in marketing campaigns.
Who do the Marketing Regulations apply to?
The Marketing Regulations apply to all local and overseas entities, regardless of whether they hold a VARA license.
What is the status of the Guidance on the Marketing Regulations?
The Guidance on the Marketing Regulations is indicative and non-binding.
What amounts to “marketing” for the purposes of the Marketing Regulations?
Marketing is very broadly defined and captures any advertisement, invitation, inducement, solicitation, offer or promotion regardless of the media or channel through which it is made.
Who can market VA activities under the Marketing Regulations?
Marketing of or relating to any VA activity in or targeting the UAE may only be carried out by (or on behalf of and approved by) a VASP licensed by VARA to carry out the VA activity to which the marketing relates.
Are any types of marketing strictly prohibited under the Marketing Regulations?
Yes, the marketing of any anonymity-enhanced cryptocurrencies.
What are the key requirements for marketing activities?
In addition to obtaining necessary approvals, marketing activities must:
comply with all applicable laws in the UAE and Dubai, including those pertaining to data protection and consumer protection;
be fair, clear and not misleading in both substance and presentation;
be clearly identifiable as being marketing or promotional activities; and
include certain disclosures (e.g. that VAs may lose their value) and refrain from including content which is inconsistent with the Marketing Regulations (e.g. not create a fear of missing out on future appreciation in value/profit). If if any marketing involves remuneration arrangements, this should be clearly and prominently notified.
Are there any exemptions from the Marketing Regulations?
Yes, the Marketing Regulations cater for a number of exemptions, including for journalists and educational content. “Key opinion leaders” and/or influencers are not regarded as journalists and cannot avail themselves of the exemption for journalists.
Purely personal or private communications will also not be considered marketing for the purposes of the Marketing Regulations. In this respect, note that:
VARA retains sole and absolute discretion to determine whether a communication is purely personal or private;
purely personal or private communications will only include friends, family or colleagues; and
any communications which are accessible (whether directly or indirectly) by 50 or more individuals will not be considered personal or private. Communications which are accessible by fewer than 50 individuals may still be considered as marketing.
There are also limited exemptions from the Marketing Regulations for marketing at physical events held in the UAE, subject to conditions.
Can VARA impose fines for breaches of the Marketing Regulations?
VARA can impose fines ranging from AED500,000 to 10 million. Note that such fines are exclusive of any fines, penalties or damages which may be imposed by other competent authorities (including courts).
For more insights and personalised advice, feel free to reach out to Eugénie Levy. This material is provided for general information only. It should not be relied upon for the provision of or as a substitute for legal or other professional advice.
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