Dubai Tightens Its Crypto Regulations to Increase Transparency and Combat Market Manipulation

The move aimed at exposing the identities of major token holders, known as crypto whales, could set an example for other jurisdictions

Dubai is tightening its crypto regulations with new measures to increase transparency and combat market manipulation, aiming to expose the identities of major token holders, also known as crypto whales.

The move, which might set an example for other jurisdictions considering regulating the growing digital asset market, is focused on reducing the risk of market manipulation and increasing clarity.

As Matthew White, CEO of the Virtual Assets Regulatory Authority (VARA), explained in an interview with Bloomberg, these regulations are designed to improve the market and reduce manipulation.

The authority is planning to introduce rules that would require Dubai-based crypto businesses to disclose the major token holders’ ownership structures.

The new regulations will apply to virtual asset service providers operating in the region, mandating them to report in detail on the ownership stakes of large holders.

This move comes in response to concerns about the lack of transparency in the crypto market, which might enable manipulation by a few entities. Despite crypto transactions usually recording wallet addresses instead of real identities, reflecting the pseudonymous nature of the transactions, White noted that blockchain technology can be leveraged to track large asset movements.

This technology would allow regulators to monitor the market and detect any manipulation despite not revealing the true identities of the holders.

In addition to the crypto whale disclosure rules, VARA is working on other measures to strengthen market stability. These include requiring crypto asset issuers and service providers to disclose reserve compositions and undergo independent audits.

By promoting transparency in these areas, Dubai aims to prevent sudden market crashes and build investor confidence.

Furthermore, White confirmed that implementing these measures is a priority for VARA.

The regulatory body also issued a warning about the volatility and market control risks associated with memecoins, which are often driven by social media hype and lack real value, ultimately presenting financial risks.

The regulatory body advised investors to be wary of unreal returns, which could be a sign of fraudulent schemes.

However, to mitigate these risks, Dubai’s regulations now require memecoins issued in the emirate to comply with strict marketing standards. Non-compliant platforms could face penalties of up to $135,000.

Moreover, VARA reserves the authority to block non-compliant platforms without notice.