RAKBank Receives Approval to Launch UAE Dirham-Backed Stablecoin

The approval marks a significant milestone in the UAE’s rapidly evolving digital finance ecosystem, though RAKBank must still complete additional regulatory and operational requirements before launching its stablecoin to the public.

How the Stablecoin Will Work

The planned stablecoin will be fully backed 1:1 by UAE dirham reserves held in segregated, regulated accounts. This means every digital token will be matched by an actual dirham held in a secure bank account, ensuring users can always redeem their tokens at full value.

RAKBank’s stablecoin will use audited smart contracts with real-time reserve attestations to maintain transparency. These technical features allow anyone to verify that the stablecoin maintains proper backing at all times.

“Receiving in-principle approval from the Central Bank of the UAE is an important milestone in our digital assets journey,” said Raheel Ahmed, Group CEO of RAKBank. “It reflects our focus on innovation that is responsible, regulated, and built on trust.”

Source: zawya.com

RAKBank, one of the UAE’s oldest banks with assets exceeding AED 88.3 billion, already enabled cryptocurrency trading for retail customers in July 2025 through a partnership with regulated brokerage Bitpanda Technology Solutions.

A Crowded Digital Dirham Race

RAKBank enters a competitive market where several institutions are pursuing similar ambitions. Zand Bank achieved a major first in November 2025 when it received full approval to launch Zand AED, the country’s first regulated, multi-chain AED-backed stablecoin on public blockchains.

AE Coin, issued by Al Maryah Community Bank, received final regulatory approval in October 2024 and has already been incorporated into government entities and private sector companies. Dubai’s Department of Finance successfully piloted crypto payments for government services using AE Coin in October 2025.

First Abu Dhabi Bank (FAB), the UAE’s largest lender, announced plans in April 2025 to launch its own dirham stablecoin in partnership with sovereign wealth fund ADQ and International Holding Company (IHC). The FAB stablecoin will operate on the ADI blockchain and aims to support the ADI Foundation’s mission of bringing one billion people into the digital economy by 2030.

International players are also entering the UAE market. Circle secured financial services permission in Abu Dhabi in December 2025 for its USDC stablecoin, while Ripple gained approval for its RLUSD stablecoin. Even telecommunications giant e& (Etisalat) is piloting a regulated dirham stablecoin under the AE Coin brand for bill payments.

UAE’s Payment Token Regulatory Framework

The Central Bank of the UAE established comprehensive rules for stablecoins through its Payment Token Services Regulation (PTSR), which took effect in July 2024. The regulation requires all stablecoin issuers to obtain CBUAE approval and maintain 100% backing with reserves held in segregated accounts.

The framework prohibits algorithmic stablecoins and privacy tokens while requiring issuers to publish white papers and undergo independent audits. After the regulation’s one-year transitional period ended in June 2025, merchants in the UAE can only accept CBUAE-approved dirham stablecoins for payment of goods and services.

Banks generally cannot directly issue stablecoins under the regulation. Instead, they must establish licensed subsidiaries to handle token issuance, ensuring proper separation between traditional banking operations and digital asset activities.

Digital Dirham Delayed as Private Stablecoins Advance

The UAE Central Bank originally planned to launch the Digital Dirham, the country’s central bank digital currency (CBDC), in the fourth quarter of 2025. However, authorities delayed the project after halting CBDC testing in November 2025 due to privacy, cybersecurity, and systemic concerns.

While the government’s digital currency remains on hold, private-sector stablecoins have moved forward rapidly. A November 2025 federal law granted CBDCs equal legal status to physical cash, but no updated timeline has been released for the Digital Dirham’s launch.

This shift has created space for banks like RAKBank to lead stablecoin innovation while regulators continue reviewing the CBDC framework. The private stablecoins are positioned to complement rather than replace the future Digital Dirham.

Market Context and Global Growth

The global stablecoin market reached $308.21 billion on January 7, 2026, having crossed the $300 billion threshold for the first time in October 2025. The market is dominated by Tether’s USDT and Circle’s USDC, which together account for approximately 82% of total stablecoin value.

Stablecoin settlements jumped 87% in 2025 to reach $9 trillion in transaction volume, according to recent industry reports. At least 19 new stablecoins launched globally last year as regulatory frameworks in the United States, Europe, and Asia provided greater clarity for digital currency issuers.

The UAE’s multi-pillar regulatory approach involves the Central Bank, Abu Dhabi Global Market, and Dubai’s Virtual Assets Regulatory Authority working together to create a comprehensive framework. Dirham-backed tokens are intended to modernize domestic payments, support digital economy initiatives, and improve efficiency for cross-border remittances in a remittance-heavy market.

Ras Al Khaimah, RAKBank’s home emirate, is positioning itself as a Web3 and digital economy hub through RAK DAO. The emirate introduced a framework granting decentralized autonomous organizations formal legal status and launched a “Builder’s Oasis” accelerator with $2 million in funding for AI, gaming, and blockchain startups.

The Road Ahead

RAKBank has not yet disclosed specific details about which blockchain infrastructure its stablecoin will use or when the pilot phase will begin. The bank said it will share updates on the pilot phase and potential expansion “in due course, subject to regulatory approvals.”

Key questions remain about how the stablecoin will connect with existing global payment rails and how different UAE regulatory frameworks will coordinate as more institutions launch digital dirham tokens. Market observers note that successful adoption will require concrete product integrations and competitive pricing to convince businesses and consumers to use dirham stablecoins in everyday transactions.

With multiple banks, telecommunications companies, and international crypto firms all pursuing regulated stablecoins in the UAE, competition will likely drive innovation in features, fees, and use cases. However, analysts caution that institutional positioning must translate into real-world utility for the stablecoin ecosystem to fulfill its promise.

Digital Dirhams Take Shape

RAKBank’s approval signals the UAE’s commitment to building a regulated digital asset ecosystem that balances innovation with consumer protection. As the first conventional bank to receive stablecoin approval after Zand’s digital bank breakthrough, RAKBank demonstrates that traditional financial institutions are moving beyond experimentation into actual deployment of blockchain-based payment systems. The coming months will reveal whether the UAE’s multi-issuer approach creates a vibrant digital currency market or fragments liquidity across competing platforms.