UAE puts crypto and DeFi under central bank rule

The United Arab Emirates (UAE) has passed a comprehensive new central bank law involving financial regulation of digital assets and decentralized finance (DeFi) as they come within the framework of banking.  

Federal Decree Law No. 6 of 2025, signed in September and made public this week, allows the UAE Central Bank (CBUAE) to license all crypto and blockchain entities operating in or from the country, regardless of the technology they use. Unlicensed operations could be fined up to 1 billion dirhams, equivalent to approximately $272 million.

New licensing rules redefine compliance for Web3 and blockchain players

Replacing the existing central bank framework of the UAE, the law expands its oversight beyond just direct issuance to cover virtual assets, DeFi protocols, stablecoins, tokenized real-world assets, decentralized exchanges, wallets, bridges, and blockchain infrastructure.

Marina D’Angelo, head of Europe at DLT Law, an international regulatory and legal blockchain advisory firm, suggested that it is still too soon to speculate on how the new law will benefit the Gulf nation’s position as a global crypto hub.

“With the new federal law now in force the UAE has effectively redrawn the regulatory perimeter around digital assets,” D’Angelo told Coindesk. “How this ultimately plays out concerning DeFi remains to be seen.”

Such regulations of decentralized finance (DeFi) and Web3 in the UAE are revolutionized by the new UAE central bank law. 

Federal Decree Law No. 6 of 2025 requires all entities involved in providing financial services via digital assets (e.g., traditional banks, crypto exchanges, or blockchain protocols) to obtain a license. 

This comprises decentralized exchanges (DEXs), lending and borrowing platforms, wallets, tokenized RWA platforms, stablecoins, bridges and other blockchain infrastructure. 

And law experts recently underscored that the “code is not a shield” principle now applies: just a protocol running open-source software or in some decentralized manner is not exempt from licensing requirements. 

Even middleware and infrastructure suppliers that allow payments, custody, or tokenization might come under the jurisdiction of the UAE Central Bank.

There is also a one-year window for existing players to be compliant, until September 2026, with new license applications stretching over a certain period, of 60 days. Nonetheless, unlicensed activities are subject to heavy penalties and administrative fines, while others may be subject to criminal sanction. 

mBridge launch signals UAE’s leap into cross-border digital payments

The United Arab Emirates’ new central bank law, enacted recently, follows the UAE’s official launch of the mBridge cross-border CBDC platform, which included a payment to China. The event was attended by the UAE’s Vice President and Deputy Prime Minister, His Highness Sheikh Mansour bin Zayed Al Nahyan, who oversaw the transaction.

HH Sheikh Mansour also chairs the Central Bank of the UAE (CBUAE), with both the Governors of the CBUAE and the People’s Bank of China in attendance in person. 

mBridge enables direct cross-border payments between banks, bypassing the need for correspondent banking and facilitating near-instant international transfers. In June last year, mBridge entered the minimum viable product (MVP) phase, with this announcement signalling it is now live.

The “Jisr” platform, also known as MBridge, for central bank digital currencies (CBDCs), was developed by the BIS in collaboration with a group of UAE and Chinese banks. It aims to facilitate cross-border payments, significantly reduce transaction costs, and provide instant payment settlement.

According to the announcement, the platform is expected to undergo further expansion in 2026, with the addition of more central banks.

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