Dubai’s Virtual Assets Regulatory Authority (VARA) is planning to mandate the disclosure of ‘Crypto Whales’ registered with crypto issuers and service providers. Holders of large amounts of cryptocurrency, also commonly known as ‘Crypto Whales,’ have become major market movers due to the transactions they undertake.
In an interview conducted on 24 February 2025, Matthew White, the CEO of VARA said, “If the majority of tokens are owned by its creator or an institution, their names should be disclosed. This will help investors know more about the products as most tokens are not owned by their creators but by third parties like venture capitalists.”
We’re pleased to share that our CEO, Matthew White, is featured in The Standard, where he discusses Dubai’s efforts to identify major virtual asset holders while strengthening investor protection. By requiring issuers and service providers to disclose significant virtual asset…
— Virtual Assets Regulatory Authority (VARA) (@varadubai) February 24, 2025
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VARA’s Focus on Enhancing Investor Awareness and Protection
VARA designs its broader strategy to safeguard investors by ensuring they have access to comprehensive information about the various virtual asset products they engage with. A clearer understanding of the products they are investing in will deliver this strategy, noting that third parties, such as venture capitalists, predominantly own many tokens.
“The new requirements are a part of the regulator’s plans for the first quarter of the year, with most of them already underway”, White said.
By mandating disclosures about major token holders, reserve compositions, and redemption mechanisms, VARA intends to offer investors a transparent and detailed description of potential risks associated with their investments.
Another regulatory initiative by VARA is also looking at mandating issuers and service providers to unveil the composition and auditing of the reserves and clearly define redemption mechanisms, offering investors a “clear description of risks.”
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Challenges to Mandate Disclosure of Crypto Whales
While these new regulations aim to help the growing base of crypto investors, challenges for its implementation remain. Most crypto holders, including Bitcoin owners, use pseudonyms, linking wallet addresses to transactions instead of the legal names of the entity or the person.
White clarified that while VARA seeks increased transparency, the authority may not require the disclosure of specific individual identities, acknowledging the prevalent use of pseudonyms in the cryptocurrency space. This approach aims to balance the need for investor information with the privacy considerations inherent in digital asset transactions.
Another consideration, however, is the already prominent hurdle of tracing scammers and money launderers in the real world. Losses from crypto scams have been on the rise every year. As per blockchain research firm Chainalysis, crypto scams jumped by 40 per cent, amounting to US$9.9 billion last year compared to 2023. Estimations in the research reveal this number could climb further to a record US$12.4 billion if more data were available.
White believes that as virtual assets creators create and store them on the blockchain, a decentralized and immutable ledger of all transactions shared across a peer-to-peer network can achieve disclosures of major holders.
VARA at the Forefront of Addressing Other Crypto Risks
Noting the challenges within the crypto market, VARA has been vigilant and has been taking numerous other similar steps to avert risks related to crypto investments. A couple of weeks ago it issued a caution against the speculative nature of meme coins. The regulator noted that the assets are prone to market manipulation, do not have any intrinsic value and are priced based on social media trends and hype. VARA cautioned that exaggerated promises of enormous gains are usually a sign of scams, and meme coin trading can result in huge financial losses as a result of precipitous price drops and illiquidity.
The proposed regulatory improvements of VARA are consistent with Dubai’s vision to become a world leader in finance and technology by 2030. Since its launch in March 2022, VARA has been working actively to establish a regulatory framework that fosters innovation while ensuring consumer protection. The authority has so far issued 24 licenses to service providers and has 350 applicants pending, which demonstrates the city’s increasing leadership in the virtual asset industry.
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Key Takeaways
- VARA mandates disclosure of major crypto holders for transparency.
- Crypto’s pseudo anonymity poses challenges to enforcing whale disclosure rules.
- VARA warns against meme coin speculation and market manipulation risks.
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