vara

Key Takeaways VARA’s marketing regulations apply to individuals and businesses promoting virtual assets. Marketing includes advertisements, social media, events, and educational content. The regulations take effect on 1 October 2024, with a 90-day grace period for compliance. Marketing must be transparent, honest, and fair. Risk warnings are mandatory for all advertisements. Influencers promoting virtual assets must adhere to the same rules as advertisers. Records of marketing activities must be kept for eight years. Event marketing requires VARA licensing and disclaimers. Exemptions exist for journalistic and educational content. Non-compliance can result in fines of up to AED 10 million per violation. Introduction In recent years, virtual assets such as cryptocurrencies have become more mainstream, attracting both individual investors and businesses. However, this rapid growth has created a need for clear regulations to ensure safe and fair marketing practices. The Virtual Assets Regulatory Authority ("VARA") has issued guidelines to regulate how virtual assets are marketed, advertised, and promoted. These regulations are designed to protect consumers and investors while ensuring transparency and integrity in the market. Let's break down these regulations in simple terms. Who Do These Regulations Apply To? These regulations are aimed at individuals and businesses involved in the promotion, advertising, or marketing of virtual assets. This includes exchanges, wallet providers, financial service firms, influencers, and third-party agencies that promote virtual assets. "Marketing" refers to any advertisement, invitation, inducement, solicitation, offer, or promotion related to virtual assets. It includes a wide range of activities such as: communications, publications, dissemination of any form of promotional, influenced, or sponsored material; social media posts, blogs, comments, endorsements, videos, podcasts, recordings, live streams, and even banners or billboards; events held in the Emirate to facilitate client solicitation or incentivise the use of virtual assets; advertisements, sponsored editorials, and any form of publicity-driven content including branding and merchandise; airdrops or the issuance, transfer, or giving of a virtual asset; and educational content, such as articles, presentations, or tutorials, whether online, offline, audio, or visual. These marketing regulations take effect on 1 October 2024. Virtual Asset Service Providers already regulated by VARA have a 90-day grace period to bring their activities into full compliance by 1 January 2025. What Are Virtual Assets? Virtual assets include cryptocurrencies like Bitcoin, Ethereum, and other digital assets that can be used for transactions or investments. VARA's regulations also extend to cover any new forms of digital assets that may emerge in the future. Key Principles of Marketing Virtual Assets There are a few main principles that must be followed when marketing virtual assets: Transparency: All marketing materials must be clear, accurate, and not misleading. The potential risks and rewards must be communicated clearly to anyone exposed to the marketing; Honesty: Promotional content must not exaggerate the benefits or downplay the risks of investing in virtual assets. This is crucial as many consumers may not fully understand the complexities involved; and Fairness: Marketing must be balanced, accurately portraying both the positive aspects and the potential risks. Advertising and Promotion Guidelines When promoting virtual assets, VARA has set specific guidelines: No Promises of Guaranteed Returns: Advertisers cannot claim guaranteed profits. Cryptocurrencies are volatile, and caution must be exercised in portraying them as "get-rich-quick" opportunities; Risk Warnings: Every advertisement must include a risk warning, clearly stating that virtual assets can fluctuate in value, and investors could lose money. This ensures that potential investors are aware of the risks; and Simple Language: All marketing content must be in clear, simple language, free from technical jargon. If technical terms are used, they must be explained. Social Media and Influencers In the age of social media, influencers play a key role in promoting products and services, including virtual assets. Influencers who promote virtual assets must adhere to the same standards as traditional advertisers. They are required to disclose any financial relationships with the companies they promote and must ensure their content is accurate and not misleading. Record-Keeping Requirements Entities marketing virtual assets in or targeting the UAE must retain records of all their marketing activities and the distribution of such materials for a minimum of eight (8) years from the last date the marketing was conducted. These records must be made available for inspection by VARA upon request, subject to compliance with applicable laws. Event Marketing Regulations If virtual assets are promoted at physical events held in the Emirate, they must comply with several requirements: Entities must be appropriately licensed by VARA and should not carry out any virtual asset activities unless licensed; No UAE residents should be allowed to sign up or onboard as clients at the event; Marketing materials must include a disclaimer stating that the entity is not licensed or regulated by VARA; and Entities must ensure all their marketing complies with the general principles of VARA's regulations. For event organisers and venues, they must ensure all attendees are qualified, maintain detailed records of attendees, and ensure that exhibitors comply with licensing requirements. VARA also reserves the right to suspend or cancel an event if regulations are not followed. Exemptions Certain exemptions exist where marketing regulations may not apply: Journalistic Exemption: Content created by journalists is exempt if: the entity is properly licensed for its activities; the purpose of the content is not primarily for marketing; and there is a disclaimer explaining the author's or related parties' interests in any virtual assets mentioned. Educational Exemption: Educational content is exempt if: the primary aim is to educate, not to market virtual assets; and there is a disclaimer explaining the author's interests, similar to the journalistic exemption. Personal or Private Communications Exemption: Purely personal or private communications do not count as marketing. However, VARA reserves the discretion to determine if communications qualify under this exemption. Notably, key opinion leaders do not receive special exemptions under these regulations. Consequences of Non-Compliance Failing to comply with these regulations can lead to severe penalties, including: Sl. No. Nature of Violation / Ground(s) for Fine Amount per Violation (AED) 1. Violation of Marketing Regulation regarding the Marketing of or relating to VA (Virtual Asset) Activities. This refers to non-compliance with the basic rules for promoting VA-related services and products. Up to 10,000,000 2. Violation of general requirements applicable to all Marketing. This includes failing to ensure marketing is fair, clear, and not misleading, as well as neglecting to include necessary disclaimers about the risks of virtual assets. Up to 10,000,000 3. Violation of additional requirements regarding the Marketing of or relating to any Virtual Asset (I.C.3). This includes failing to provide disclaimers about the potential loss of value in virtual assets or instructing/directing the purchase of virtual assets. Up to 10,000,000 4. Violation of rules regarding marketing conducted by a third party (I.C.5). This applies when a third party, such as a marketing agency, does not follow the necessary regulations or fails to receive proper approval for marketing activities. Up to 2,000,000 5. Violation of the journalistic exemption. This refers to instances where journalistic content is presented as marketing without proper disclaimers or licensing in accordance with the guidelines. Up to 2,000,000 6. Violation of the educational exemption. This applies when educational content regarding virtual assets fails to meet the criteria for non-marketing, such as not including disclaimers or improperly framing educational material as marketing. Up to 2,000,000 7. Violation of rules regarding the facilitation of marketing by platforms and channels (I.E.1). This occurs when platforms like social media or websites enable virtual asset marketing but fail to ensure compliance with applicable laws and guidelines. Up to 10,000,000 8. Violation of record-keeping requirements by platforms and channels (I.E.2). This fine is imposed when platforms do not maintain proper records of due diligence related to virtual asset marketing, which must be kept for eight years. Up to 500,000 9. Violation of the operation of application stores and platforms (I.E.3, I.E.4). This includes allowing unlicensed apps or software related to virtual assets to be downloadable within the Emirate, or failing to implement geo-blocking and location-based filtering as required. Up to 2,000,000 10. Violation of Marketing regulations at physical events held in the Emirate (I.F.1). This fine applies when virtual asset marketing is conducted at an event without proper disclaimers, or when entities are not properly licensed. Up to 10,000,000 11. Violation of rules regarding the organisation, hosting, promotion, and management of physical events in the Emirate (I.F.2). This fine is imposed when event organisers fail to ensure attendees and exhibitors meet the necessary qualifications, or when they neglect to comply with event suspension or cancellation orders from VARA. Up to 10,000,000 12. Violation of Marketing regulations regarding the promotion of virtual assets from the Emirate in other jurisdictions (I.G.1). This fine applies when an entity markets virtual assets outside the UAE without complying with local regulations in the jurisdiction being targeted. Up to 10,000,000 13. Violation of any provision of these Marketing Regulations not specifically listed above. This covers any breaches that don't fall under the specific categories mentioned but still violate the overall regulations. Up to 10,000,000 14. Failure to comply with any remedial, enforcement, or other actions imposed under these Marketing Regulations. This fine is imposed when entities do not follow corrective actions ordered by VARA to resolve a breach. Up to 10,000,000 15. Repeat violation within one (1) year from the date of the original violation. If a violation is repeated within a year, the fine is doubled to reflect the repeat offense. The amount of the applicable fine as indicated in this Schedule 1 will be doubled. 16. Non-payment of fine within any timeframe specified by VARA. An additional fine is imposed at 1% per month (compounded) for unpaid fines until the full amount is paid. Further fine to be issued, the amount of which shall accrue from when a fine is due at 1% per month (rounded up to the nearest full month) for any unpaid amounts of the fine on a compounding basis, until the initial fine and the further fine are paid in full. Cross-Jurisdiction Compliance In addition to complying with UAE regulations, entities conducting marketing activities targeting other jurisdictions must also comply with the applicable laws and regulations of those regions. VARA may collaborate with international authorities to enforce these rules. Conclusion The marketing regulations for virtual assets ensure that businesses act responsibly when promoting these innovative financial products. By prioritising transparency, fairness, and honesty, VARA is working to create a safer environment for consumers to engage with virtual assets. Whether you're a company or an individual, it's important to follow these guidelines to maintain trust and uphold the integrity of the virtual asset market. As the world of digital assets continues to grow, regulations like these will play a crucial role in keeping the market safe and accessible to everyone. For any VASPs operating in or wanting to market in the UAE, good counsel and preparation is key for success. *** TLP Advisors is a dynamic and forward-thinking consulting, strategy and law firm specialising in providing cutting-edge solutions to our diverse clientele. With our roots deeply embedded in financial services, gaming, web3, and emerging tech, we offer unparalleled knowledge and support tailored to these rapidly evolving sectors’ unique challenges and opportunities. TLP Advisors has consistently been the firm of choice for L1 chains, DeFi protocols, gaming companies, fintech and payment companies, foundations, funds, and investors. We have built a reputation for excellence through frequent collaborations with regulators, funds, and technology incubators. Our deep understanding of the intricate regulatory landscapes and industry dynamics allows us to provide strategic guidance and innovative solutions that empower our clients to navigate complex challenges and seize emerging opportunities. www.techlawpolicy.com *** Regulations on the Marketing of Virtual assets and related Activities 2024 | Virtual Assets Regulatory Authority (VARA). (n.d.). https://rulebooks.vara.ae/rulebook/regulations-marketing-virtual-assets-and-related-activities-2024 Part C, Clause 2, Requirements for Marketing, Regulations on the Marketing of Virtual assets and related Activities 2024 | Virtual Assets Regulatory Authority (VARA). (n.d.). https://rulebooks.vara.ae/rulebook/regulations-marketing-virtual-assets-and-related-activities-2024 Part E, Platforms and channels | Virtual Assets Regulatory Authority (VARA). (n.d.). https://rulebooks.vara.ae/rulebook/e-platforms-and-channels Part F, Clause 1, Regulations on the Marketing of Virtual assets and related Activities 2024 | Virtual Assets Regulatory Authority (VARA). (n.d.). https://rulebooks.vara.ae/rulebook/regulations-marketing-virtual-assets-and-related-activities-2024 Part D, Clauses 1-4, Regulations on the Marketing of Virtual assets and related Activities 2024 | Virtual Assets Regulatory Authority (VARA). (n.d.). https://rulebooks.vara.ae/rulebook/regulations-marketing-virtual-assets-and-related-activities-2024 Part D, Clauses 4, Regulations on the Marketing of Virtual assets and related Activities 2024 | Virtual Assets Regulatory Authority (VARA). (n.d.). https://rulebooks.vara.ae/rulebook/regulations-marketing-virtual-assets-and-related-activities-2024 Schedule 1 – Fines | Virtual Assets Regulatory Authority (VARA). (n.d.). https://rulebooks.vara.ae/rulebook/schedule-1-fines Part G, Clause 1, Regulations on the Marketing of Virtual assets and related Activities 2024 | Virtual Assets Regulatory Authority (VARA). (n.d.). https://rulebooks.vara.ae/rulebook/regulations-marketing-virtual-assets-and-related-activities-2024