June 5, 2024
Policy & Regulation

UAE Central Bank Greenlights New Regulation For Stablecoins

The board of directors of the Central Bank of the United Arab Emirates (CBUAE) has approved the creation of a new regulation and license system for stablecoins. This marks a key step towards expanding the digital economy and supporting innovation. Moreover, the decision, made during a meeting in Abu Dhabi, underscores the country’s commitment to enhancing its financial infrastructure.

Key Initiative under the FIT Program

The approval of the stablecoin oversight system comes as part of the government’s Financial Infrastructure Transformation (FIT) program. This initiative aims to bolster digital transactions, elevate the UAE’s digital economy, and pave the way for greater financial innovation.

Chaired by UAE Vice President and CBUAE Chairman Sheikh Mansour bin Zayed Al Nahyan, the meeting discussed various projects under the FIT program. It emphasized the nation’s strategic focus on digital advancement.

Regulatory Clarity and CBDC Issuance

During the meeting, the board also greenlit the issuance of regulations that delineate the issuance, licensing, and supervision of AED-backed payment tokens, as explained by KARM Legal Consultants founder Kokila Alagh.

These regulations mandate that payment tokens must be backed exclusively by UAE dirhams. They cannot be linked to other currencies, digital assets, or algorithms. This move aims to instill confidence in the stability and reliability of digital transactions within the UAE.

Furthermore, the CBUAE’s decision to issue a central bank digital currency (CBDC) under the FIT initiative underscores its commitment to addressing cross-border payment inefficiencies and driving domestic payment innovation. By embracing CBDC technology, the UAE aims to enhance its competitiveness as a global financial and digital payments hub. Thus, positioning itself at the forefront of digital finance innovation.

To sum up the UAE’s proactive approach to regulatory clarity signals its readiness to embrace the opportunities presented by the rapidly evolving digital economy. At the same time, this new regulation will ensure the stability and integrity of its financial ecosystem.

Image by freepik

Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

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