UAE Central Bank Issues New Rules: A New Era of DeFi and Virtual Asset Regulation

Regulatory Background and Core Provisions

In November 2025, the United Arab Emirates issued Federal Decree No. 6, formally placing decentralized finance (DeFi), Web3 protocols, stablecoins, decentralized exchanges (DEXs), cross-chain bridges, and related infrastructure under the regulatory authority of the Central Bank. The new regulation mandates that any platform offering payment, trading, lending, custody, or investment services must obtain a license. The previous “code only” exemption approach is no longer valid.

This initiative demonstrates the UAE’s commitment to enhancing financial security and compliance oversight while sustaining innovation, aiming to provide investors and users with a more transparent and secure environment.

Which Projects and Services Fall Under Regulation?

The new regulation covers a wide range of activities, including but not limited to:

• Stablecoin payment or exchange services
• Decentralized exchanges (DEXs)
• Cross-chain bridges and cross-chain transfer tools
• Lending, collateralization, borrowing, and other DeFi services
• Custody, asset management, and investment services
• Services that provide middleware or infrastructure support for the functions listed above

This regulatory scope encompasses nearly all core modules of the DeFi ecosystem, meaning that almost every decentralized project providing financial services will need to adapt for compliance.

Compliance Requirements and Penalty Mechanisms

Relevant projects must apply for and secure an operating license from the UAE Central Bank by September 2026. The Central Bank may fine platforms that operate without a license up to AED 1 billion (approximately USD 272 million), and may also incur criminal liability.

The regulation also details requirements for risk-weighted capital, customer due diligence (KYC/AML), asset segregation, and compliance reporting. All financial activities must be conducted within a lawful and secure framework.

Impact on DeFi Platforms and Users

This new regulation significantly affects both platforms and users:

• Platforms: Large, compliant platforms can attract institutional capital and mainstream investors while reducing policy risks. Smaller or anonymous projects that fail to meet compliance requirements may be unable to continue operations.
• Users: Users will benefit from increased transaction security and transparency, though some unlicensed or anonymous services may disappear.
• Market impact: The market will become more regulated overall, with improved industry credibility and institutionalization. This will make it more attractive to global investors and financial institutions.

How Should Investors and Enterprises Respond?

Projects planning to operate in the UAE or serve UAE users should promptly initiate compliance reviews and the licensing application process, especially for platforms involving stablecoins, DEXs, cross-chain bridges, lending, and custody functions.

Investors should prioritize licensed, transparent, and compliant projects to mitigate policy and legal risks. Projects that meet regulatory requirements will have an easier time securing institutional funding and supporting long-term growth.

In summary, the implementation of Federal Decree No. 6 signals the UAE’s transition from a crypto-friendly haven to a compliance-driven innovation hub. This represents both a challenge and an opportunity for DeFi and virtual asset sectors.