The Virtual Assets Regulatory Authority (VARA) has issued new marketing rules – the Marketing Regulations (the Regulation). In this article we will cover the practical aspects of this Regulation, covering the following questions: (i) who is obliged to follow the new Regulation? (ii) what do I need to do to comply with the new Regulation? (iii) when will the new Regulation come into effect? (iv) what are the penalties for not complying with the new Regulation?

Who is obligated to follow the new Regulation?

First, we need to understand the concept of “marketing” in the Regulation.  Part 1 A, of the Regulation provides that marketing means “any advertisement, invitation, inducement, solicitation, offer or promotion.”

Accordingly, regardless how you practice any of these actions (in-person, remotely, physical, digital etc..), if you are performing one of them related to Virtual Assets, you are practicing “marketing” as per the regulatory standards.

It’s important to note that a very common practice in the Web3 industry is considered marketing under this regulation, which is the airdrop – so yes, if you want to airdrop your token in Dubai, you need to apply for a VARA marketing license.

Another very important point is that this regulation applies not only to the Emirate of Dubai, but in fact, “All Marketing of or relating to any Virtual Asset or VA Activity in or targeting the UAE must comply with” the Marketing Regulations (Part I, B, 1). And here we see that the regulation does not only apply to Virtual Assets, but also to Virtual Assets Activity.

The new Regulations also define obligations for Platforms and Channels, as set out under the Section E.

Section E defines that entities involved in facilitating the marketing of Virtual Assets (VAs) in or targeting the UAE, including broadcasters, publishers, search engines, and digital platforms, must ensure compliance with all applicable laws and regulations, including specific Emirate-level rules. These entities must maintain records of such activities for eight years and provide them to the Virtual VARA upon request. Additionally, operators of application stores or platforms must ensure that any VA-related applications available in the Emirate are owned or approved by a Licensed Virtual Asset Service Provider (VASP). Geo-blocking and location-based filtering technologies must be implemented to ensure compliance with these requirements.

So, yes, if you are not licensed in the UAE, don’t be surprised if your VA app is no longer downloadable by your customers living in the country.

Entities not licensed by VARA may market Virtual Assets or carry on VA-related activities at physical events in the UAE under a limited exemption, provided certain conditions are met. They must not engage in any VA activity in the UAE without proper licensing, and they are prohibited from onboarding UAE residents as clients during the event. All marketing materials must comply with the regulations and include a disclaimer stating the entity is not licensed or regulated by VARA, and thus cannot conduct VA activities from Dubai. The entity must be licensed in jurisdictions where it offers services, and marketing should be limited to displaying the entity’s name, logo, activity types, fees, and educational information, including live demonstrations.

There are also rules for event organizers and venues. Entities responsible for organizing, hosting, promoting, or managing events in the UAE where Virtual Assets or VA-related marketing may occur, must ensure attendees are suitable for the event based on its nature and content. They are required to maintain detailed records of all attendees, including names, ages, countries of residence, and other relevant qualification information. Event organizers must also obtain signed confirmations from exhibitors stating they will not conduct VA activities in the UAE without VARA licensing. Additionally, organizers must be able to demonstrate compliance with these regulations upon VARA’s request and be prepared to suspend or cancel the event if instructed by VARA, clearly announcing the reason for such action as non-compliance with the Regulations.

We have four exemptions to the regulations, as follows:

1 – Journalistic Exemption: applies to entities in the UAE publishing content related to Virtual Assets, in its capacity as a journalist, provided they are licensed by relevant authorities. The entity must be appropriately licensed and ensure that the primary purpose of the content is not marketing any VA or related activities. Additionally, a prominent disclaimer must disclose any interest held by the author or related parties in the discussed VAs or activities, such as employment or commercial arrangements. The content must also comply with other relevant marketing regulations, and if there is a reference to the purchase of a VA, it should include a clear disclaimer that VAs are volatile and may lose value in full or in part. This ensures journalistic integrity while protecting consumers from potential conflicts of interest.

2 – Educational Exemption: applies to entities publishing educational content related to Virtual Assets, as long as certain conditions are met. The content’s primary purpose must not be marketing any VA or related activity, and it must include a clear disclaimer outlining any interest held by the author or related parties, such as family members, in the VAs or activities discussed. This interest may include employment, commercial arrangements, or potential benefits. The content must comply with relevant marketing regulations, and if it references the purchase of a VA, it must include a prominent disclaimer stating that VAs are highly volatile and may lose value in full or part. This ensures the educational intent of the content while protecting consumers from unintended promotional influence.

3 – Personal or Private Communications: An entity engaging in purely personal or private communications related to Virtual Assets is exempt from being considered as conducting marketing. However, VARA retains the sole discretion to determine when communications no longer qualify as purely personal or private. This ensures that private discussions are not mistakenly classified as marketing, while giving VARA the authority to assess individual cases.

4 – Key Opinion Leaders: Key opinion leaders (KOLs), or any group defined as such by relevant authorities in the UAE, are not eligible for the journalistic or educational exemptions under the marketing regulations. KOLs must fully comply with all marketing regulations set by VARA and any other applicable requirements from relevant authorities for activities conducted in the Emirate. This ensures that influencers or public figures adhere to strict guidelines when discussing or promoting Virtual Assets.

What do I need to do, to be comply with the new Regulation?

There are general requirements that all marketing activities must adhere to in the UAE.

All marketing related to Virtual Assets must adhere to strict guidelines to ensure transparency, fairness, and accuracy. Promotional content must be clearly identifiable such as avoiding misleading statements and ensuring that the risks associated with Virtual Assets, including their volatility, lack of liquidity, and potential loss of investment, are communicated.

Marketing should not imply that investments are low risk or guaranteed, nor should it create urgency or fear of missing out. Additionally, promotions must not exploit consumers inexperience, and any incentives offered must not obscure the associated risks. These guidelines aim to protect investors and ensure responsible marketing practices in the Virtual Asset space.

In addition to general marketing requirements, promoting Virtual Assets in or targeting the UAE must adhere to strict guidelines to protect consumers. Marketing materials must not include calls to buy or messages that seek to instruct or direct the purchase or sale of Virtual Assets. They are required to include a prominent disclaimer stating that Virtual Assets can lose their value entirely or partially and are subject to extreme volatility. It must also be clearly stated that investors can lose all the money or value they invest and do not benefit from any form of financial protection. Furthermore, sending any Virtual Asset to a VA Wallet without prior consent or a clear expression of interest from the wallet owner is prohibited.

Additionally, a record of all Marketing and details of distribution of such Marketing, for a minimum of eight (8) years from the date on which such Marketing is last conducted must be retained.

For the marketing agencies it’s important to be aware that you can only market licensed entities and must comply with the marketing regulations while the entity remains responsible for all the activities carried out by the marketing agencies. So, if you want an agency doing the marketing or your VA activity, you must closely monitor this, because if there is a breach of the rules, it is not a defense to claim that you were unaware and such liability falls on the agency.

When will the new Regulation come into effect?

The effective date of the new Regulation is 1 October 2024.  Entities that received approval for marketing activities before this date, can continue to operate based on the already received authorization for up to 90 (ninety days) from the effective date of the new Regulation.

What are the penalties for not complying with the new regulation?

There are specific fines per each violation an entity can carry out based on the new Regulation. In general terms, the fines can reach values of 10 million Dirhams.

Compliance is not just a box to check—it’s the foundation for long-term success in the Virtual Assets industry. Ensure your company is fully compliant with the latest regulations by contacting us today. Our regulatory experts are here to provide the strategic guidance you need to stay ahead and thrive in this rapidly changing landscape.

Ícaro Avelar. Seasoned Legal Counsel, providing legal support for web3 companies since 2017 in corporate structure and regulatory matters. Email: icaro@bankslegal-adgm.com.