The Central Bank of the United Arab Emirates (CBUAE) board has approved a new system for overseeing and licensing stablecoins.
In a recent meeting in Abu Dhabi, the board discussed various projects under the government’s Financial Infrastructure Transformation (FIT) program.
This initiative aims to enhance digital transactions, advance the digital economy, and foster innovation in the UAE.
Sheikh Mansour bin Zayed Al Nahyan, the UAE Vice President and CBUAE Chairman, chaired the meeting.
The attendees included Deputy Chairmen Abdulrahman Saleh Al Saleh and Jassem Mohammad Al Zaabi, CBUAE Governor Khaled Mohamed Balama, and other board members.
During the meeting, the board approved a regulation for overseeing and licensing stablecoins.
KARM Legal Consultants founder Kokila Alagh explained to Unlock Blockchain that the new regulations clarify the issuance, licensing, and supervision of dirham-backed payment tokens.
She stated, “The regulations clarify the issuance, licensing and supervision of dirham-backed payment tokens.”
Alagh emphasized that payment tokens must be backed by UAE dirhams and cannot be linked to other currencies, digital assets, or algorithms.
She added, “Merchants and service providers can only accept dirham-backed tokens and no other virtual assets.”
The meeting also reportedly included discussions on key projects under the FIT program.
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On February 13, the CBUAE announced its plan to issue a central bank digital currency (CBDC) as part of the FIT initiative.
This CBDC aims to address inefficiencies in cross-border payments and drive domestic payment innovation.
The CBUAE believes that issuing a CBDC will help position the UAE as a competitive financial and digital payments hub.
In addition to the stablecoin licensing, one of the UAE’s financial regulators recently updated its rules for stablecoin recognition.
On June 3, the Dubai Financial Services Authority (DFSA) introduced new criteria for recognizing stablecoins.
Currently, the DFSA recognizes only a few crypto tokens, including Bitcoin, Ether, Litecoin, XRP, and Toncoin (TON).
This limitation means that funds under the Dubai International Financial Centre (DIFC) cannot invest in other tokens beyond the five recognized crypto assets.
However, the revised token regime allows investing in unrecognized crypto tokens, provided the investment does not exceed 10% of the funds’ gross asset value.
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