Dubai’s regulatory body for virtual assets has issued a cautionary statement regarding the growing risks tied to memecoin investments, as their market presence expands rapidly. The Virtual Assets Regulatory Authority (VARA) of Dubai has strongly urged investors in the city to exercise caution when dealing with memecoins, describing them as “highly speculative” assets. According to VARA, these assets pose a significant risk of financial loss for those involved. Earlier this month, the US SEC Commissioner also drew attention to the potential dangers of memecoins, warning that they could be scam tokens, offering high returns in a short time.
Established in March 2022, VARA oversees the crypto industry in Dubai. In recent months, the authority has intensified its efforts to regulate and monitor unregulated and high-risk digital assets.
Last week, VARA published an official statement expressing concerns about memecoins, which are crypto assets often named after popular social media figures, animals, or internet memes. Well-known memecoins like Dogecoin and Shiba Inu have gained popularity and created a niche in the crypto market.
“Memecoins are often subject to market manipulation. Many of these assets lack inherent value and are priced based on social media trends, hype, or deceptive promotional tactics,” VARA noted in its release.
The regulatory authority has cautioned investors to avoid investing in newly launched memecoins, especially those promising unrealistic returns. VARA also holds the authority to restrict any suspicious memecoin projects without prior notice and has advised crypto investors to protect their funds from projects with dubious market history or potential fraud.
Additionally, VARA has warned crypto projects and firms against promoting unregistered tokens in Dubai.
“Any marketing, promotion, or solicitation of virtual assets must comply with VARA’s regulations. Entities involved in unauthorized virtual asset activities could face enforcement actions,” the authority emphasized.
In a recent interview with Bloomberg, SEC Commissioner Hester Peirce also addressed the issue of memecoins. She mentioned that many memecoins fail to meet current regulations in the US and urged Congress and the Commodity Futures Trading Commission to address concerns regarding these assets.
According to Forbes, the current market valuation of the memecoin sector is estimated at $60.04 billion (approximately Rs. 5,21,641 crore). Among the top five memecoins by market cap are Dogecoin, Shiba Inu, Pepe, Bonk, and Floki, as listed by Forbes.
