Cryptocurrency firms in the United Arab Emirates are celebrating a newfound era of regulatory clarity and market stability following the Central Bank of the UAE’s recent decision to implement a comprehensive licensing system for stablecoins. This initiative, part of the “Payment Token Services Regulation,” has been warmly welcomed by industry professionals who see it as a crucial step toward legitimizing and integrating digital currencies into the UAE’s financial ecosystem.
“This licensing system marks the initial stride towards stablecoin development in the UAE,” commented Jason Allegrante, Chief Legal and Compliance Officer at digital assets infrastructure provider Fireblocks.
The new regulation mandates that stablecoins be backed by UAE dirhams, a move anticipated to strengthen the local cryptocurrency market and draw international players to the region.
“Having stablecoins backed by fiat currency provides stability for the token,” noted Arushi Goel, Policy Lead for the Middle East and Africa at Chainalysis. “AED-backed stablecoins could spur the development of a robust domestic market for cryptocurrency.”
The UAE’s stablecoin regulation stands out for its diversity, with multiple regulatory bodies overseeing different facets of the cryptocurrency ecosystem, experts confirm.
The Virtual Asset Regulatory Authority (VARA) oversees fiat-backed stablecoins, except for AED-backed stablecoins, which fall under the jurisdiction of the Central Bank of the UAE (CBUAE).
Additionally, the Dubai Financial Services Authority (DFSA) and the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM) each maintain their distinct regulatory frameworks for digital assets.
