The emirate of Dubai, which has recently taken numerous measures to establish and promote itself as a hotbed of Web3 activity, is now identifying illegal crypto entities operating in its region. In the latest development, Dubai-based governing body Web3 has launched proceedings against seven virtual property companies. The Virtual Asset Regulatory Authority (VARA) was established in 2022 to ensure that all businesses are connected to Virtual Digital Assets (VDA).
VARA issued a statement on the situation this week, claiming the move was aimed at strengthening its enforcement program against fugitives. The authorities, however, did not reveal the names of the entities involved.
The reason these entities were sent cease and desist orders, according to VARA, is for conducting their business without obtaining the necessary approvals.
“VARA will not tolerate any attempts to operate without proper permits, nor will we allow unauthorized advertising of virtual property activities. Our priority is to ensure that the virtual property ecosystem in Dubai remains safe for consumers and investors, while at the same time being a progressive environment for compliant entities,” the statement said.
An investigation of these companies is currently underway in Dubai. If found guilty, these companies can face fines ranging between AED 50,000 (approximately Rs 42 lakh) and AED 100,000 (approximately Rs 84.09 lakh), in addition to other specified penalties.
Against the backdrop of this situation, VARA issued a reminder to market players saying that the notoriously volatile virtual asset industry is heavily regulated in the region. Moreover, entities wishing to continue offering their services in Dubai are reminded that they are required to comply with all requirements in accordance with VARA rules.
“Market enforcement actions send a strong message: VARA will not tolerate any attempts to operate without proper licenses, nor will we allow unauthorized advertising of virtual asset activities. Our marketing regulations further emphasize Dubai’s commitment to ensuring transparency and always protecting the interests of stakeholders,” the statement added.
The development comes after Dubai granted operational approvals to crypto companies, including Crypto.com, OKX and Binance, among others.
Since its establishment, VARA has made several decisions that raise Dubai’s position in the Web3 sector. While most nations are still working on finalizing their crypto laws – Dubai issued comprehensive crypto laws framed under VARA about two years ago.
Back in April this year, VARA regulators said that small crypto players will receive special benefits in Dubai that include a cost-effective operational and compliance process for smaller players.
In March 2024, Dubai reportedly (prepared) four regulations for crypto service providers, detailing crypto regulations. The emirate has imposed an application fee of $27,000 (roughly 22 lakh rupees) for crypto companies seeking operating licenses.