VARA was established in March 2022.
The memecoin market valuation stands at $60.04 billion, as per Forbes
Photo Credit: Pixabay/ Danor Aharon
Dubai's crypto regulatory body has issued an alert about the risks related to memecoin investments owing to their increasing market penetration. The Virtual Assets Regulatory Authority (VARA) of Dubai has strictly asked the city's investor community to be cautious while engaging with memecoins, calling them “highly speculative” assets. As per VARA, memecoins pose a significant risk of financial loss to those who engage with it. Earlier this month, the commissioner of the US SEC had also highlighted the possibility of memecoins promising high returns in a short span of time being scam tokens.
VARA was established in March 2022 to oversee the crypto industry in Dubai. In recent months, the regulatory body has stepped up scrutiny over unregulated and risky digital assets.
Last week, in an official post, VARA highlighted its concerns with memecoins, a category of crypto assets branded after trending social media personalities, animals, or memes. Dogecoin and Shiba Inu are among popular memecoins that have managed to carve a niche for this category of crypto tokens in the broader market.
“Memecoins are 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 said in its statement.
The regulatory body has advised investors to refrain from engaging with newly launched memecoins, especially the ones that claim to fetch unrealistic returns to the investors. The body has the power to restrict any suspicious memecoin project without prior notice. It has advised crypto investors to protect their finances against questionable projects with lack of market history and fraudulent patterns.
The authority, meanwhile, has also warned crypto projects and firms from promoting unregistered tokens in Dubai.
“Any promotion, advertising, or solicitation of virtual assets must adhere to VARA's marketing regulations. Entities engaging in unauthorised virtual asset activities may be subject to enforcement action,” it added.
In a recent interview with Bloomberg, SEC commissioner Hester Peirce also addressed the memecoin menace. He said that many memecoins do not comply with current regulations in the US and asked the Congress and the Commodity Futures Trading Commission to address concerns around memecoins.
As per Forbes, the memecoin market valuation stands at $60.04 billion (roughly Rs. 5,21,641 crore). Dogecoin, Shiba Inu, Pepe, Bonk, and Floki have been listed by Forbes as the top five memecoins by market cap.
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