UAE Expands Digital Asset Law: DeFi, Web3, and Stablecoins Now Fully Regulated

The United Arab Emirates has taken one of its most decisive steps yet toward regulating the digital finance industry. With the introduction of Federal Decree-Law No. 6 of 2025, the UAE has officially expanded the authority of the Central Bank to include activities across DeFi, Web3, stablecoins, and digital-asset services. For a country known for its progressive approach to blockchain innovation, this marks a major shift, one that brings clarity, but also significant responsibility, to the industry.

Unlike earlier frameworks that focused mostly on centralized exchanges or custodial businesses, the new law directly targets the broader ecosystem. Any platform or service, decentralized or not, that facilitates payments, lending, exchange, custody, or investment functions now falls under the Central Bank’s regulatory oversight. This effectively ends the long-held argument that “decentralized code” exists outside of regulatory reach. Whether a service is run by a company, a DAO, or a smart contract, the law applies if UAE users are impacted.

The scope of the law is wide. It covers digital payment services, digital wallets that operate with custody or stored value, stablecoin issuers, liquidity providers, and DeFi protocols offering lending or exchange functionality. Even infrastructure tools used by Web3 platforms, such as wallet-as-a-service providers or node operators, may now require licensing. The goal is clear: if a service touches financial value or user funds, it must operate with the same standards expected in traditional finance.

The penalties reflect the seriousness of this shift. Unlicensed activity can result in fines of up to AED 1 billion (approximately $272 million), along with potential administrative or criminal consequences for severe violations. For a global crypto hub like the UAE, where thousands of blockchain firms operate across Dubai, Abu Dhabi, and various free zones, this new framework brings both structure and accountability.

Yet the law isn’t designed to stifle innovation. Individuals remain free to hold and self-custody their crypto. What regulators want is a clear separation between personal use and financial service provision. This approach mirrors global trends: governments are drawing tougher lines around businesses handling user funds while allowing open-source technology and self-sovereign custody to flourish.

The timing is important. With the rise of stablecoins, tokenized assets, on-chain lending markets, and cross-border digital payments, the UAE wants to ensure it remains a trusted financial center. Regulators are preparing for a world where DeFi and traditional finance increasingly overlap, and where consumer protection, financial stability, and compliance cannot be optional.

For global projects, this law changes the landscape. Companies offering DeFi or Web3 services to UAE users may need to restructure operations, obtain licenses, or adjust their product models. The days of serving users in the UAE without regulatory alignment are over. For compliant players, however, the law creates a more predictable environment and a competitive moat.

For South Asia and Pakistan, this development is strategically relevant. Many Pakistani users rely on UAE-based financial infrastructure and crypto platforms. As the UAE becomes more regulated, Pakistani exchanges, developers, wallet providers, and Web3 startups will need to understand and eventually match these evolving standards. Stablecoin adoption, on-chain remittances, and RWA tokenization will all be shaped by this new regulatory foundation.

The UAE’s message is unmistakable: DeFi, Web3, and digital finance are no longer in an experimental phase. They are entering the regulated financial system, and if the UAE is moving in this direction, the rest of the world will follow sooner or later.