Middle EastRegulation
|3 min ReadUAE expands financial authority over DeFi and Web3 platforms
Tariq Al-Saidi
Senior Analyst
Published
Jan 16, 2026
The rules in the United Arab Emirates just changed in a big way. A new financial law has pulled DeFi and Web3 directly into the regulatory arena, ending years of “we’re just code” arguments and putting real weight behind the central bank’s oversight. The message is simple. If you operate in payments, custody, lending, or anything that even looks like a financial service, the regulator wants you inside the perimeter. And the penalties reach as high as 1 billion dirhams, which is about 272 million dollars. That is historic. Everybody sees it.
The end of the “just code” defense
The UAE’s Federal Decree Law No. 6 of 2025 has been in effect since mid September. It is a central bank law that regulates financial institutions, insurance activity, and digital asset services. Articles 61 and 62 outline a broad set of activities that require a license from the Central Bank of the UAE. Crypto payments. Digital stored value. Anything conducted by “any means, medium, or technology.”
Crypto lawyer Irina Heaver said this brings protocols, DeFi platforms, middleware, and infrastructure providers into scope if they enable payments, exchange, lending, custody, or investment services. In simple terms, decentralization no longer shields you. Code does not shield you. If a protocol supports stablecoins, real world assets, decentralized exchange functions, bridges, or liquidity routing, a license may be required.
Enforcement has already started. Unlicensed activity can bring fines up to 1 billion dirhams and even criminal sanctions. Industry projects working in the UAE have until September 2026 to align their systems. It is a turning point for the region’s crypto scene.
Self-custody remains legal, but companies face new rules
The new law directly affects stored value services, which has raised concerns about crypto wallets. Kokila Alagh of Karm Legal said many users are confused about whether self custody is restricted. It is not. Individuals can still use their own wallets freely. The law expands requirements for companies, not users.
Some analysts, including Trading Strategy’s Mikko Ohtamaa, suggested the law could create a de facto ban on crypto and self custodial wallet apps. Alagh and Heaver disagreed, saying that interpretation is incorrect. They emphasized that licensing requirements apply only when a wallet provider enables payments, transfers, or regulated financial services for UAE users.
Karm Legal has received a surge of inquiries, and further guidance from the central bank is expected as implementation progresses. For now, individuals are unaffected, while companies must evaluate whether their activities fall within regulated scope.
Ohtamaa criticized UAE lawyers, arguing that anything making the region less attractive for crypto reduces earnings for independent firms. He claimed some lawyers distort facts to protect income. Alagh said her firm is actively following up with the central bank, although no timeline for clarification has been given.
Disclaimer: This document is intended for informational and entertainment purposes only. The views expressed in this document are not, and should not be taken as, investment advice or recommendations. Recipients should do their own due diligence, taking into account their specific financial circumstances, investment objectives and risk tolerance, which are not considered here, before investing. This document is not an offer, or the solicitation of an offer, to buy or sell any of the assets mentioned.