UAE Central Bank to oversee virtual asset payment and DeFi ecosystem

UAE Central Bank published its Federal Decree Law No. 6 of 2025, which was issued in September, that brings virtual assets, and Decentralize Finance under its regulatory compliance regime. It brings virtual assets, DeFi protocols, stablecoins, tokenized real-world assets, decentralized exchanges, wallets, bridges and all supporting blockchain infrastructure under the central bank’s authority. The compliance deadline is September 2026.

According to Article (62) of the Law, it states, that carrying on Licensed Financial Activities through Emerging Technologies, without prejudice to the Licensed Financial Activities referred to in item (1) of Article (61) of this decree-law, any Person carrying on, offering, issuing, or facilitating, whether directly or indirectly, any Licensed Financial Activity – regardless of the medium, technology, or form
employed – shall be subject to the licensing, regulatory, and oversight jurisdiction of the UAE Central Bank.

It adds that this includes Virtual Assets payment tokens, decentralized finance (DeFi), other emerging technology, or other digital or physical instruments used in connection with the Licensed Financial Activities; and offering or operation of platforms, decentralized applications (dApps), protocols, or technological infrastructure that facilitate, intermediate, or enable the provision of financial services, such as payments, credit, deposits, money exchange, remittances, or investment services.

The new law contemplates fines for unlicensed operations within the country of up to 1 billion dinars ($272 million).

In Article 187 of the Law, The Central Bank clearly differentiates which virtual assets it intends to oversee. Any currency in its digital form, and related to UAE Dirham, cash, money, currency or any similar term, even virtual assets or digital currencies which are used as a means of payment or exchange, however virtual assets will not be covered it they are for investment purposes, or being exchange from one virtual asset to another or swap operations.

Legal analysis and questions on UAE Central Bank Law

Amir Matar, Fintech lawyer and Founder of APCO Worldwide, in a LinkedIn post had the following questions with regards to the new law, noting that while the law aims to close regulatory gaps and enhance investor protection, its broad construction introduces significant regulatory uncertainty especially if fully DeFi protocols are within scope.

Yet he asks, How will it be enforced? How will “facilitation” and “enabling” be defined for DeFi infrastructure and middleware? What thresholds or criteria will determine when a protocol team, DAO, or foundation is “identifiable” and thus subject to licensing?
How will CBUAE coordinate with SCA and VARA to avoid duplicative or conflicting requirements, especially for cross-border and multi-jurisdictional projects? Will there be safe harbors or exemptions for open-source developers, non-custodial tools, or purely technical infrastructure? What compliance expectations will apply to front-end operators, middleware, and cross-chain bridges?

Irena Heaver, Founder of Neos Legal, also commented on the new law, and considered it as one of the most consequential shifts for Web3 and digital asset infrastructure in the region.

She explains, “Article 62 is the key provision to understand, to be read together with the rest of the Law, and specifically together with Article 61. Article 61 What counts as a “Licensed Financial Activity” Article 61 provides the master list of activities that require a license from the Central Bank.

These include, among others: Core banking, taking any kind of deposits (including Shari’ah-compliant) and providing all types of credit and funding facilities, Open finance, providing open finance services (data/financial access and connectivity), FX/payments/remittance – currency exchange and money transfer services, including instant transfers, Virtual asset payments, providing payment services using virtual assets, Stored value & digital money, providing stored value, retail payment, and digital money services, Marketing & promotion arranging, promoting, or marketing any of the licensed financial activities. Dealing as principal, acting as principal in financial products that affect the institution’s balance sheet (FX, derivatives, bonds, sukuk, equities, commodities, and any other CBUAE-approved products). Insurance & Takaful – providing insurance, reinsurance, and related professions’ services, including Takaful and re-Takaful.

As for Article 62 she notes that this brings protocols, DeFi platforms, middleware and even infrastructure providers into scope if they enable activities such as payments, exchange, lending, custody or investment services. What this means in practice: “We’re just code” is no longer a defense. The “Decentralisation” argument does not exempt a protocol.

Protocols that support stablecoins, RWAs, DEX functions, lending, bridges, or liquidity routing may require a license.⠀She adds, “Article 62 is the UAE’s clearest signal yet that DeFi and Web3 infrastructure will be considered as regulated based on economic function, not technological form. Projects building or operating in the UAE should treat this as a pivotal regulatory moment and align their structures before the September 2026 transition deadline.”

The Central Bank of UAE already started implementing this law

The Central Bank of UAE has already started implementing its law. Already two AED stablecoin providers have been granted licenses, AECoin, and UAE Zand Bank, which recently launched its Central Bank regulated, multi-chain AED backed stablecoin on public blockchains.

Even crypto.com, a global crypto exchange also recently through Foris DAX Middle East, trading as Crypto.com, has received In-Principle Approval (IPA) from the Central Bank of the UAE (CBUAE) for a Stored Value Facilities (SVF) license which will allow it to provide digital payment services for Dubai government fees in UAE Dirham or Dirham pegged stablecoins.

Bahrain was a leader in Central Bank regulation of virtual assets

There are many others such who have applied, received or are in the process of receiving a license to offer virtual asset payment licenses, custody licenses, and other.

Yet the UAE Central Bank was not the first to bring in the virtual asset, DeFi ecosystem into its regulatory space. Long before Bahrain since the onset of its virtual asset DLT journey had put the Central Bank of Bahrain at the center of virtual asset licensing. It also recently issued a progressive stablecoin regulatory framework.

Finally Saudi Arabia is also in the midst of issuing its stablecoin, DeFi, and virtual asset regulations.