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Dubai's Virtual Assets Regulatory Authority (VARA) has imposed financial penalties on 19 firms for operating without licenses and breaching marketing regulations, signaling intensified enforcement in one of the crypto industry's major regional hubs.
VARA issued cease-and-desist orders and fines ranging from AED 100,000 to AED 600,000 (approximately $27,000 to $163,000), calibrated to the severity and scope of violations, it announced in a statement on Tuesday. The regulator said its enforcement division continues proactively identifying and investigating unlicensed activity.
VARA did not disclose the names of penalized firms or specific violations beyond unlicensed operations and marketing breaches.
"Enforcement is a critical component of maintaining trust and stability in Dubai's Virtual Asset ecosystem," VARA's Regulatory Affairs and Enforcement Division stated. "These actions reinforce VARA's mandate: to ensure that only firms meeting the highest standards of compliance and governance are permitted to operate."
The regulator warned that unlicensed activity and unauthorized marketing will not be tolerated, emphasizing that only VARA-licensed entities are authorized to provide virtual asset services in or from Dubai. All penalized firms have been directed to immediately cease operations and stop promoting unlicensed services.
Henri Arslanian, founder of Nine Blocks Capital, described the enforcement actions as positive for the broader crypto ecosystem. "This is an excellent development for not only Dubai but the broader crypto ecosystem considering Dubai's and the UAE's outsized role in digital assets as it should deter some of the bad apples and reward firms that have taken the time, effort and resources to operate by the rules," he said in a note on Wednesday.
Arslanian predicted additional enforcement actions ahead. "I expect to see more similar enforcement actions in the coming months, including in some of the more technical and hidden areas of the crypto ecosystem," he added.
Dubai has positioned itself as a major crypto hub through relatively accommodating regulatory frameworks compared to Western jurisdictions. VARA was established in 2022 to oversee virtual asset activities in the emirate, separate from the Dubai International Financial Centre's regulatory regime.
The enforcement wave follows Dubai's efforts to balance crypto innovation with investor protection and regulatory compliance. Major exchanges including Binance, Crypto.com, and OKX have established operations in Dubai under VARA oversight, attracted by the emirate's crypto-friendly positioning.
However, the regulatory environment has tightened as authorities seek to prevent Dubai from becoming a haven for unlicensed operators. VARA's marketing regulations, which the 19 firms violated, impose strict requirements on how virtual asset services can be promoted to ensure consumer protection.
The penalties represent Dubai's most significant enforcement action to date against unlicensed crypto operators. The move aligns with broader regional efforts to establish credible regulatory frameworks that attract legitimate businesses while excluding bad actors.
VARA's statement emphasized that engaging with unlicensed operators carries "significant financial, legal, and reputational risk" for consumers, investors, and institutions. The warning suggests potential liability for users transacting with unauthorized platforms.
The UAE has emerged as a significant crypto jurisdiction, with both Dubai and Abu Dhabi competing to attract digital asset businesses through distinct regulatory regimes. Dubai's VARA framework operates separately from the Abu Dhabi Global Market's virtual asset regulations, creating regulatory arbitrage opportunities within the country.
Whether Dubai can successfully balance crypto-friendly policies with robust enforcement remains an open question. The jurisdiction faces competition from Singapore, Hong Kong, and Switzerland, all pursuing similar strategies of regulated crypto innovation.
