Dubai’s crypto regulator VARA warns against meme coin promotions

The Virtual Assets Regulatory Authority has issued a public alert cautioning investors against meme coin advertisements due to their high-risk nature.

Dubai’s crypto regulator the Virtual Assets Regulatory Authority has issued a warning about meme coin promotions as meme coins show no signs of losing popularity. In a Feb. 13 public alert, VARA, which oversees the virtual asset sector in Dubai, cautioned investors about the risks tied to these tokens, including price manipulation, liquidity issues, and potential fraud.

“Meme coins are highly speculative and volatile assets, frequently subject to market manipulation. Many such assets lack intrinsic value and derive their pricing from social media trends, hype, or misleading promotional strategies.”

VARA

VARA warned that promises of huge profits are often a red flag for scams, adding that meme coin trading can be risky, with prices crashing fast and liquidity drying up. “There is a risk of significant financial loss within short timeframes due to price collapses, liquidity shortages, or scams,” the regulator said.

The UAE first mentioned issuing cryptocurrency licenses in February 2022. A year later, Dubai rolled out regulations for crypto companies, making it necessary for them to get approval and the right licenses to operate in the city. There are also specific rules for activities like issuing tokens, offering consulting, providing storage, and running exchange services. As of press time, the meme coin market capitalization is $81.1 billion, according to CoinGecko’s data.