UAE Central Bank Greenlights Stablecoin Licensing System
The Central Bank of the United Arab Emirates (CBUAE) has green-lighted a new framework for the regulation and licensing of stablecoins. In a recent gathering in Abu Dhabi, the board deliberated on various projects tied to the government’s Financial Infrastructure Transformation (FIT) program. This initiative is designed to enhance digital transactions, stimulate the country’s digital economy, and encourage innovation.
Sheikh Mansour bin Zayed Al Nahyan, UAE vice president and CBUAE chairman, presided over the meeting. Other notable attendees included deputy chairmen Abdulrahman Saleh Al Saleh and Jassem Mohammad Al Zaabi, CBUAE Governor Khaled Mohamed Balama, and members of the central bank’s board.
During the meeting, the board approved a regulation to monitor and license stablecoins. KARM Legal Consultants founder, Kokila Alagh, shared insights with the local media, explaining that the regulation outlines the principles for the issuance, licensing, and supervision of payment tokens backed by the UAE dirham (AED). She emphasized that these tokens must be backed specifically by AED and not linked to other currencies, digital assets, or algorithms. Merchants and service providers are limited to accepting only AED-backed tokens.
Although the specific details of the meeting were not disclosed, discussions reportedly involved significant projects within the FIT program. On February 13, the CBUAE announced its intention to roll out a central bank digital currency (CBDC) as part of the FIT initiative. The introduction of a CBDC aims to tackle inefficiencies in cross-border payments and promote domestic payment innovations. By issuing a CBDC, the CBUAE believes the UAE will bolster its position as a leading financial and digital payments hub.
In addition to stablecoin licensing, one of the UAE’s financial regulators, the Dubai Financial Services Authority (DFSA), has recently updated its regulations surrounding stablecoin recognition. On June 3, the DFSA set forth additional criteria for recognizing stablecoins. Currently, the regulator acknowledges a small number of crypto tokens, including Bitcoin, Ether, Litecoin, XRP, and Toncoin (TON). As a result, funds under the Dubai International Financial Centre (DIFC) are limited to investing in these five recognized crypto assets.
Under the revised token regime, the DFSA has allowed for investments in unrecognized crypto tokens. This is contingent upon the investment not exceeding 10% of the funds’ gross asset value. The updated regulations are a part of broader efforts to adapt to the rapidly evolving digital asset landscape and provide a regulated environment for conducting business in the UAE.
These regulatory advancements represent the UAE’s commitment to fostering a robust and innovative financial ecosystem. By implementing a clear framework for stablecoin regulation and updating criteria for crypto token investments, the UAE aims to attract more digital asset businesses and promote a more secure and transparent financial market.
The focus on digital transformation and innovation at the central bank and regulatory level highlights the UAE’s strategic vision to remain at the forefront of the global financial landscape. These efforts not only support a thriving digital economy but also position the country as an attractive hub for financial and technological enterprises looking to leverage digital assets.
The new system for overseeing and licensing stablecoins, along with the updated crypto token regime by the DFSA, underscore the UAE’s proactive approach to financial regulation in the digital age. The concerted efforts under the FIT program reflect the country’s ambition to drive digital payment innovations and address global financial inefficiencies, solidifying its role as a leading player in the digital economy.
30 thoughts on “UAE Central Bank Greenlights Stablecoin Licensing System”
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So proud to see UAE making giant strides in the digital finance world!
Limiting investments to 10% of the funds’ gross asset value is just too conservative. How do they expect growth with such tight constraints?
Secure, regulated stablecoins? Yes, please! Thank you, CBUAE! 🇦🇪🪙
This is a groundbreaking moment for UAE’s digital economy! Exciting times ahead! 🚀💰
DFSA’s updated criteria are still too rigid. How are we supposed to be a world leader with such conservative policies?
Propping up the AED-backed stablecoin is just a way to artificially inflate the importance of their currency. Not a fan!
Doesn’t feel very innovative when you’re boxing everyone in with regulations. Smacks of control rather than progress.
How are we supposed to attract global businesses with such a narrow focus? AED-backed tokens only? Not practical! 🤦♂️
Honestly, this feels more like a power grab than an effort towards innovation. Just another way for them to control everything.
Can’t wait to see the dynamic changes these regulations will bring! UAE is truly ahead of the curve!
Why not include other stablecoins that are backed by credible assets or currencies? This is too inward-looking for a global economy.
Amazing effort by Sheikh Mansour and CBUAE! This is a clear step towards financial excellence.
This is a giant leap towards a secure and innovative financial landscape!
High five to UAE for creating a strong and transparent framework for stablecoins and crypto assets!
UAE’s commitment to innovation is inspiring! Kudos to Sheikh Mansour and the CBUAE team!
Incredible vision! UAE is gearing up to be the hub for digital financial innovation.
Huge applause for the UAE government’s forward-thinking approach! The future looks bright!
This stablecoin regulation seems like a step backward. Why can’t UAE adopt a more inclusive approach like other countries?
Another fancy initiative destined to create more bureaucracy and hurdles for businesses.
Kudos to CBUAE for fostering a robust and transparent financial system! 👏 Let’s watch UAE shine on the global stage! 🌠✨
Absolutely amazing steps taken by CBUAE! This will definitely boost the digital economy in the UAE. 🚀
Huge win for the digital economy! Congrats to everyone involved!
UAE’s strategic initiatives in digital finance are commendable. Big applause to the regulators!
Wow! A regulated environment for stablecoins will bring so much trust and security. Love UAE’s vision!
A solid framework is key to financial success. Well done, UAE!
What a visionary move by CBUAE! This will definitely push the digital economy to new heights.
Why restrict it to only AED-backed tokens? What if businesses want to trade internationally? This seems too limiting!
Another regulation, another hoop to jump through. This is just going to make it harder for smaller players to enter the market.
The clarity in the regulations will undoubtedly attract more businesses. UAE is on fire! 🔥💼
Super excited about UAE’s role in revolutionizing digital payments! A huge thumbs up! 👍💲