Dubai’s crypto regulator has issued an alert to the risks associated with Memecoin investment due to its growing market penetration. Dubai’s virtual asset regulator (VARA) strictly requires the city’s investor community to be cautious when interacting with Memecoins, calling it a “highly speculative” asset. According to Vara, Memecoins poses a significant risk of financial losses to those who interact with them. Earlier this month, the U.S. SEC commissioner also highlighted the possibility of a high return in a short period of time in which it is expected to achieve a short-term scam token.
VARA was founded in March 2022 to oversee the crypto industry in Dubai. Regulators have reviewed unregulated and risk-taking digital assets in recent months.
Last week, in an official post, Vara highlighted its focus on Memecoins, a crypto asset for brands following trends in social media characters, animals or memes. Dogecoin and Shiba Inu are among the popular monuments, and they have managed to carve a niche for such crypto tokens in a wider market.
“Memes are often operated by the market. Many of these assets lack intrinsic value and receive pricing from social media trends, hype or misleading promotional strategies,” Walla said in a statement.
The regulator has advised investors to avoid interacting with newly launched members, especially those claiming to receive unrealistic returns to investors. The agency has the right to limit any suspicious memorial projects without prior notice. It recommends crypto investors protect their financial situation from suspicious projects lacking market history and fraudulent patterns.
Meanwhile, the authorities also warned crypto projects and companies to promote unregistered tokens in Dubai.
“Any promotion, advertising or tender for virtual assets must comply with Vara’s marketing regulations. Entities engaged in unauthorized virtual assets activities may take enforcement actions.”
SEC Commissioner Hester Peirce also talked about the Memecoin threat in a recent interview with Bloomberg. He said many memorials do not comply with current U.S. regulations and asked Congress and the Commodity Futures Commission to address concerns about Memecoins.
According to Forbes, the Memecoin market is valued at US$6.04 billion (approximately Rs 521,641 crore). Dogecoin, Shiba Inu, Pepe, Bonk and Floki have been listed by Forbes as the top five members on the market cap.
