Dubai's Virtual Assets Regulatory Authority issued financial penalties and cease-and-desist orders against 19 companies operating without proper licenses on Tuesday. The enforcement action represents VARA's ongoing commitment to safeguarding the emirate's rapidly expanding digital asset ecosystem while maintaining investor protection standards.
Penalties ranged from $27,000 to $163,000 depending on the severity and scope of each violation. Companies were sanctioned for offering cryptocurrency services without approval and for breaching VARA's marketing regulations established in 2024. All penalized entities received directives to immediately halt operations and stop promoting unlicensed services in or from Dubai.
The list of sanctioned firms includes UAEC Digital Fintech FZCO, Morpheus Software Technology FZE operating as FUZE, TON DLT Foundation, GLEEC DMCC, UEEX Technology and LBK Blockchain FZCO. Additional companies facing penalties include Triple A Technologies, Hatom Labs, Hokk Finance, Mastercoin DMC and A to Z Globe DMCC, among others. VARA stated these firms breached regulatory obligations by failing to obtain required licenses.
Nicholas McNicholas, head of enforcement at VARA, explained that the authority evaluates multiple factors when determining fine amounts. These considerations include the nature, seriousness and impact of each violation, plus specific circumstances of advertising activities. For marketing violations, VARA examines the level and scale of targeting Dubai customers, including any misleading information suggesting firms hold proper licensing.
VARA's marketing rules implemented in 2024 require disclaimers on promotional materials and mandate prior authorization before promoting products to citizens and residents. CEO Matthew White previously stated these requirements compel virtual asset service providers to deliver services responsibly, fostering transparency and trust. The regulations aim to protect consumers from potentially misleading or fraudulent promotional activities.
Morpheus Software Technology FZE had previously received fines for anti-money laundering violations and governance failures. The firm accepted VARA's findings, submitted a remediation plan and allowed appointment of an independent compliance monitor to oversee corrective measures. This case demonstrates VARA's willingness to work with companies committed to achieving regulatory compliance.
The enforcement action follows similar measures in October 2024 when VARA fined seven unlicensed cryptocurrency entities between $13,600 and $27,200. McNicholas confirmed that sanctioned firms had opportunities to appeal to VARA before actions were published, and an independent appeal process remains available. All relevant details about sanctioned companies are published on VARA's website for public transparency.
VARA emphasized that engaging with unlicensed crypto operators carries significant legal, financial and reputational risks for consumers, investors and institutions. Only VARA-licensed entities are permitted to offer cryptocurrency services in or from Dubai under current regulations. The authority aims to balance innovation with robust safeguards for all stakeholders in the digital asset market.
The United Arab Emirates Securities and Commodities Authority partnered with VARA in August to unify the country's approach to cryptocurrency regulations. The collaboration eliminates gaps between federal and emirate-level rules, ensuring consistent oversight for all virtual asset service providers. VARA confirmed the agency collaborates closely with SCA and will take joint action when necessary.