The UAE’s newly enacted central bank law integrates digital assets and decentralized finance into the mainstream banking regulatory framework, reinforcing the country’s ambition to emerge as a global leader in financial innovation.
In October, UAE President His Highness Sheikh Mohamed bin Zayed Al Nahyan issued Federal Decree Law No. (6) of 2025, regarding the Central Bank, and the regulation of financial institutions and activities and insurance activities.
The law is part of the UAE’s continuous efforts to streamline the legislative and supervisory frameworks of the financial sector, enhance its stability and competitiveness, and align the UAE’s financial ecosystem with the highest international standards. It is set to strengthen the Central Bank’s independence and vital role in ensuring financial and monetary stability.
Law strengthens the UAE’s competitive edge as a leading global financial hub
The new law modernizes and unifies the UAE financial regulatory framework by bringing banks, reinsurance and insurance (re/insurance) companies, other financial institutions and virtual assets under the same law.
The new law reduces some regulatory shortcomings regarding fintech licensing, consumer protection and the regulation of digital payments and virtual assets. It also addresses some emerging risks, such as digital contagion and cybercrime, and aims to strengthen the UAE’s competitive edge as a leading global financial hub.
What are the key changes that the new law introduces?
The CBUAE is recognized as the resolution authority. The CBUAE will manage orderly failures of non-viable licensed financial institutions (LFIs), including banks, re/insurance companies, and other financial institutions, to prevent systemic contagion. It can intervene in LFIs in cases of restructuring or winding down, including by replacing senior management and directors.
Moreover, the CBUAE also has the power to appoint a resolution administrator to take control of the institution, establish a temporary bridge institution to take over and continue some operations, and establish a separate asset management to transfer nonperforming loans or assets that are difficult to value. The CBUAE can also carry out a bail-in of certain liabilities to recapitalize the entity that provides critical functions to a level that is sufficient to restore its solvency and ensure continuity of key operations.
Digital money, payment tokenization, and stored value facilities brought under the CBUAE’s oversight
The new UAE central bank law states that 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 Central Bank.
This includes the following:
1. 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
2. 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.
Law widens central bank’s regulatory net
This new law brings mobile wallets, payment gateways and fintech companies under the UAE central bank’s supervision to protect end-users. It introduces minimum requirements on cybersecurity, operational resilience and data protection standards across payment service providers.
The law widens the regulatory net to cover almost everything in the crypto ecosystem, including cryptocurrencies and stablecoins, DeFi protocols, tokenized real-world assets, decentralized exchanges, wallets, bridges and blockchain infrastructure.
If a crypto or blockchain company operates in or from the UAE, it must now be licensed by the Central Bank, regardless of whether it’s centralized or decentralized. Unlicensed operations will face very steep penalties under the new law.
According to the legislation, the law is designed to encourage innovation through faster licensing decisions within 60 days, risk-based capital requirements, and a one-year transition period, running until September 2026, for existing firms to meet compliance standards.
It also introduces new licensable activities such as virtual asset payments, open finance, and digital wallets. Enhanced fraud safeguards, expedited dispute resolution for claims of up to AED 100,000, and strengthened Shari’ah oversight pave the way for the growth of Islamic DeFi and the rising adoption of tokenized Sukuk—Islamic bonds issued and traded on blockchain platforms. Global Sukuk issuance reached $65.6 billion last year and is expected to expand to $2.5 trillion by 2029.
Read| UAE among global leaders in digital asset regulation: Report
Stricter fines to improve customer protection
The CBUAE now has the authority to impose severe penalties for misconduct, such as mis-selling products, employing hidden fees, or failing to resolve customer complaints effectively. The decisions of the CBUAE’s complaint unit will be final and enforceable on financial institutions and insurance companies.
While regions like Europe are still rolling out frameworks such as MiCA, the UAE has jumped ahead by introducing one of the most comprehensive digital asset regulations in the world.
The law treats digital assets as part of mainstream finance, not a separate experiment. It improves investor and consumer protection, and creates legal certainty that institutional investors care about
This makes the UAE especially attractive to serious, well-funded crypto and fintech firms, even if it pushes out less compliant players.
