Transformation in UAE’s Financial Landscape
A significant transformation is underway in the financial landscape of the United Arab Emirates (UAE) as the newly enacted Federal Decree Law No. 6 of 2025 by the UAE Central Bank will establish comprehensive regulations for decentralized finance (DeFi) and the broader Web3 ecosystem.
Importance of the Legislation
Crypto lawyer Irina Heaver from NeosLegal emphasized the importance of this legislation, noting it represents one of the most consequential shifts in the region’s cryptocurrency regulations to date. This law is set to redefine how digital asset activities—such as payments, lending, custody, and investment services—are regulated, bringing decentralized platforms and their infrastructures under the regulatory authority of the Central Bank of the UAE (CBUAE).
Regulatory Scope and Compliance
The law, which has been effective since September 16, 2025, explicitly states that any individual or entity that conducts licensed financial activities through any spectrum of technology will fall within the CBUAE’s regulatory scope. Heaver highlighted that past defenses leveraged by DeFi entities, such as claiming “we’re just code,” will no longer be tenable.
Specifically, projects involved with stablecoins, real-world assets, decentralized exchanges, and liquidity routing might now face the obligation to obtain appropriate licenses to operate legally in the UAE. Furthermore, non-compliance could result in hefty financial penalties—up to 1 billion dirhams (approximately $272.3 million)—alongside possible criminal charges.
Implications for Cryptocurrency Wallets
In terms of regulations concerning cryptocurrency wallets, Kokila Alagh, managing partner of Karm Legal Consultants, clarified that while some confusion persists about the implications for self-custody wallets, the law does not prohibit individuals from using their own wallets. Rather, it extends the regulatory framework primarily to wallet providers that facilitate payments or other financial services.
Alagh mentioned that Karm Legal has fielded a plethora of inquiries regarding the implications of the new law on self-custodied assets. Given the law’s approach, companies are urged to assess whether their operations fall within the newly defined regulated activities. Although some viewpoints suggest a potential de facto prohibition against self-custody wallets, regulatory experts agree that further insight from the CBUAE is forthcoming as the law is implemented.
Ongoing Discussions and Controversies
Finally, the ongoing discussion in the legal community has sparked controversy, with some critics questioning the alignment of local attorneys with the emerging legal framework, framing it as contradictory to the interests of the crypto sector in the UAE. As implementation progresses, stakeholders anticipate further guidance to navigate this evolving regulatory landscape.
