Tuesday, June 25, 2024
HomeAltcoinsUAE Central Bank Approves Licensing System For Stablecoins

UAE Central Bank Approves Licensing System For Stablecoins

The Central Bank of the United Arab Emirates (CBUAE) board has approved the issuance of a new regulatory framework for overseeing and licensing stablecoins. This move is part of the government’s Financial Infrastructure Transformation (FIT) program, which aims to enhance digital transactions, advance the digital economy, and foster innovation within the UAE.

The approval was given during a board meeting held in Abu Dhabi. The specific date of the meeting was not mentioned, but it aligns with ongoing strategic financial initiatives discussed in 2024. The meeting and subsequent decisions took place in Abu Dhabi, United Arab Emirates, focusing on national financial regulatory developments.

During the board meeting, discussions were held about several key projects under the FIT program, including the new regulations for stablecoins. These regulations mandate that all payment tokens must be backed exclusively by the UAE Dirham and not linked to other currencies, digital assets, or algorithms. The regulations also stipulate that merchants and service providers in the UAE can only accept dirham-backed tokens. This framework is part of a broader effort to position the UAE as a leading hub for financial and digital payments innovation.

The board’s decision to regulate and license stablecoins complements other recent initiatives such as the announcement on February 13 about issuing a central bank digital currency (CBDC) to improve cross-border payment efficiencies and stimulate domestic payment innovations. Furthermore, the Dubai Financial Services Authority (DFSA) updated its rules for stablecoin recognition on June 3, allowing for a broader engagement with crypto assets while maintaining strict investment limits to manage risk. These regulatory advancements are part of the UAE’s strategic efforts to strengthen its financial infrastructure and regulatory framework, enhancing its competitive edge as a global financial and digital payments leader.

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