Digital asset payments now regulated by UAE Central Bank

A new decree by Emirati lawmakers has brought digital assets and other emerging technologies within the regulatory remit of the Central Bank of the United Arab Emirates (CBUAE), effective immediately.

Known as the UAE’s Federal Decree Law No. 6, the new rules say that anyone “carrying on, 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 Central Bank.”

The Decree lists examples of what activities are considered “Licensed Financial Activities” and includes “providing payment services using digital assets.” It also specifically highlights the use of digital asset payment tokens and DeFi platforms in connection with Licensed Financial Activities and the provision of financial services, as further examples of activities covered by the Decree.

The provisions are broad and appear to bring any use of digital assets for payments within the regulatory perimeter of the CBUAE.

Not only does this mean that businesses engaging in those activities may need to obtain licensing from the Central Bank, but they will also be subject to its enforcement and penalty regime. Regulated institutions that violate CBUAE rules can receive fines of up to AED 1,000,000,000, while their authorized representatives may individually receive fines of up to AED 5,000,000.

Conducting regulated financial activities without the requisite regulatory approval is also a criminal offense, which can carry prison terms.

On the brighter side, the new law also lays the legal foundation for recognizing the digital dirham—the CBUAE’s CBDC—as legal tender. This means that the digital dirham is now on a legal footing with physical cash in the UAE.

Precisely what this means will be unclear until the CBUAE publishes detailed regulations.

In early November, the UAE government celebrated the first government transaction made using the CBDC. Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, First Deputy Ruler of Dubai and Deputy Prime Minister and Minister of Finance for the UAE, announced the milestone on X.com:

Read the full decree here. Articles most relevant to digital assets can be found under Articles 61 and 62.

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