UAE central bank sets milestone for stablecoins

In a strategic move designed to reinforce the country’s pioneering status in financial innovation, the Central Bank of the United Arab Emirates (CBUAE) has approved a new licensing system overseeing stablecoins.

UAE opts for a clear and reassuring regulatory framework for stablecoins

The CBUAE takes a decisive step towards regulating digital currencies. According to a recent press release, its board of directors has approved the introduction of a regulatory framework to supervise and authorize the issuance of stablecoins backed by the Emirati dirham.

As explained by Kokila Alaghfounder of KARM Legal Consultants, this regulation brings welcome clarity to the treatment of stablecoins.

Key requirements stipulate that these tokens must be fully backed by dirhams and cannot be linked to any other currency, digital asset or algorithm. This measure aims to boost the confidence and stability of stablecoins, which have become a popular gateway to more volatile cryptos.

Adoption of digital assets a cornerstone of UAE financial strategy

This decision is part of the vast “Financial Infrastructure Transformation Program” (FIT) or financial infrastructure transformation (FIT) program launched by the Emirates. This ambitious project aims to boost digital transactions, advance the country’s digital economy and foster innovation.

Beyond stablecoins, the CBUAE also plans to issue a Central Bank Digital Currency (CBDC) in the near future. This flagship project is designed to facilitate cross-border payments and establish the country’s competitiveness as a key hub for financial and digital payments.

In addition to stablecoin regulations, the United Arab Emirates strengthen their overall framework on crypto. Recently, the Dubai Financial Services Authority updated its accreditation criteria for digital tokens, currently recognizing only a limited number, including Bitcoin, Ether and Litecoin.