Dubai Issues Urgent Warning on Memecoins—76% Linked to Failed Projects
Dubai’s Virtual Asset Regulatory Authority (VARA) has issued a stark warning about memecoins, citing their high volatility, market manipulation risks and increasing association with scam projects.
The February 13 alert tells investors not to follow social media hype blindly, as memecoins have no fundamental value and are often driven by misleading promotions.
VARA’s statement highlights a growing concern: many memecoins rise and fall within weeks, leaving investors with significant losses. Unlike traditional cryptocurrencies with utility and backing, memecoins are driven by trends, making them highly susceptible to pump and dump schemes.
With Dubai’s crypto sector growing rapidly, VARA has stepped up oversight, warning memecoin issuers they must comply with local regulations. Those launching projects from Dubai without adhering to VARA’s rulebooks will face enforcement action, including trade platform restrictions.
Study: 76% of Memecoins Linked to Failed Projects
A recent study by Coinwire found:
- 76% of influencers on X (formerly Twitter) have promoted memecoins that are now defunct.
- 80% of memecoins hyped by influencers lost over 70% of their value within a week.
This shows many investors are swayed by influencers without doing due diligence. Influencers often cash in on early stage promotions, while retail investors are left holding worthless tokens when the hype dies down.
VARA’s warning aligns with these findings, telling investors to scrutinize memecoin ads and avoid projects with no clear roadmap or utility. The regulator also reminds users that access to some memecoins may be restricted without notice, further emphasizing the risks.
VARA Cracks Down on Memecoin Issuers
As Dubai becomes a global crypto hub, VARA is getting stricter. Any entity wanting to issue a memecoin from Dubai must comply with the regulator’s framework, ensure transparency and accountability.
Failure to do so may result in enforcement action, including trade platform bans. VARA’s move signals a more structured approach in the crypto space, discouraging speculative gambling on projects with no real world value.
For investors, this is a reminder: not all crypto assets are created equal and memecoins are one of the riskiest bets in the digital asset market.
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