UAE Bans Crypto Payments

In a landmark move, the United Arab Emirates (UAE) has enacted Federal Decree-Law No. 6 of 2025, significantly expanding the Central Bank’s oversight of digital assets. Effective September 16, 2025, this law introduces stringent licensing requirements for a broad spectrum of crypto-related services and tools, effectively banning unlicensed crypto payment activities within the country.

Expanded Regulatory Scope

The new legislation grants the UAE Central Bank (CBUAE) comprehensive authority over digital asset operations, encompassing virtual assets, decentralized finance (DeFi) protocols, stablecoins, and tokenized real-world assets. This expansion aims to bring all entities involved in crypto-related activities under a unified regulatory framework, ensuring consistent oversight and compliance.

Licensing Requirements and Penalties

Under the new law, all entities offering financial services via digital assets—including traditional banks, crypto exchanges, and blockchain protocols—must obtain a license from the CBUAE. Operating without such a license is now a criminal offense, subject to severe penalties, including imprisonment and fines up to AED 500 million (approximately $136 million). This stringent approach underscores the UAE’s commitment to maintaining financial stability and consumer protection.

Investor Identification, Introduction, and negotiation.

Impact on Crypto Payment Services

The regulation effectively bans unlicensed crypto payment activities, including the use of self-custody wallets and blockchain explorers, unless they are licensed by the CBUAE. This move has raised concerns among crypto developers and users who view it as a de facto ban on self-custody tools. However, the law does not prohibit individuals from owning cryptocurrencies or using private wallets for personal use, provided they comply with the licensing requirements.

Transition Period and Compliance

Existing crypto service providers have a one-year transition period, until September 2026, to align their operations with the new regulatory framework. This period is intended to allow businesses to obtain the necessary licenses and implement compliance measures. New license applications are expected to be processed within 60 days, facilitating a smoother integration into the regulated environment.

Broader Implications for the Crypto Industry

The enactment of Federal Decree-Law No. 6 of 2025 marks a significant shift in the UAE’s approach to digital asset regulation. By imposing strict licensing requirements and penalties, the CBUAE aims to enhance the integrity and security of the financial system. While this move may pose challenges for some crypto entities, it also presents an opportunity for those willing to comply with the regulatory standards to operate within a well-defined legal framework.

Conclusion

The UAE’s new law reflects a global trend towards more stringent regulation of digital assets. As the crypto industry continues to evolve, such regulatory measures are likely to become more common, balancing innovation with the need for consumer protection and financial stability.

References

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