Dubai’s Virtual Asset Regulatory Authority (VARA) has warned consumers about the dangers of investing in memecoins, citing the grim downsides of their funds going all the way to zero.
According to a public advisory, VARA’s main protest is against promotions involving memecoins circulating in Dubai’s cyberspace, with the regulator noting a flagrant violation of its rulebook by issuers. While memecoins have made their mainstream debut, regulators around the globe continue to view the asset class with a great deal of skepticism.
For VARA, memecoins are “highly speculative and volatile assets” and are susceptible to market manipulation and rug pulls. It warns that without intrinsic value, memecoins leverage “misleading” advertisement strategies and social media hype to create a buzz.
VARA’s statement urges investors to keep their guard against promises of juicy returns by meme coin promoters, noting that consumers can suffer large-scale financial losses. VARA adds that the losses are typically triggered by sharp price collapses, fraud, and liquidity shortages from low trading volumes and wash trading.
Digital assets issuers must seek the consent of VARA before promoting their memecoins to Dubai’s residents. VARA’s marketing regulations require issuers to give a clear warning that investing in digital assets poses a significant financial risk, while influencers are expected to label promotions on their social media posts.
“Consumers and investors should be aware that access to memecoin platforms may be restricted without prior notice, and it is advisable to take necessary measures to safeguard personal financial security,” read the statement.
