Dubai’s Virtual Assets Regulatory Authority (VARA) is set to introduce new regulations requiring cryptocurrency businesses to disclose the identities of major token holders. This initiative aims to enhance transparency and protect investors in the city's burgeoning digital asset market.
Preparing for the New Rules
In an interview with The Standard, VARA’s chief, Matthew White, clarified that the forthcoming rules will apply to licensed crypto issuers and service providers, compelling them to reveal large stakeholders, often referred to as 'whales.' The focus will be on cases where a significant portion of a token's supply is held by a few individuals or institutions, such as venture capital firms.
Transparency in the Crypto Market
White emphasized that the initiative is designed to give investors a clearer picture of the assets they purchase. Many cryptocurrencies are significantly controlled by early investors or project creators, which can considerably influence market dynamics. VARA aims to mitigate market manipulation and undisclosed control risks by making large holdings more transparent while maintaining individual anonymity in blockchain transactions.
Importance of Investor Protection
Recently, VARA issued a warning regarding meme coin promotions, highlighting the risks associated with these tokens, including price manipulation and liquidity issues. The agency emphasizes that many meme coins lack intrinsic value, driven more by speculative trends on social media. To further its commitment to investor protection, VARA also tightened regulations for companies marketing cryptocurrency investments, requiring disclaimers in promotional materials.
Expected to be implemented in the first quarter of the year, these new rules are aimed at bolstering investor security and transparency in Dubai's virtual asset market.
