The United Arab Emirates is taking a bold step in regulating the digital finance sector with the introduction of Federal Decree Law No 6 of 2025. This new legislation, effective from September 16, 2025, aims to bring decentralized finance (DeFi) platforms and related services under the purview of the Central Bank of the UAE, as emphasized in the official statement.
New Licensing Requirements for Digital Finance Entities
Under the new law, all entities involved in digital finance activities—including payments, exchanges, lending, custody, and investment services—will be required to obtain licenses from the Central Bank. This marks a significant shift in the regulatory landscape, as previous claims of decentralization or operating solely as code will no longer provide immunity from compliance requirements.
Penalties for Unlicensed Operations
The law imposes stringent penalties for unlicensed operations, with fines potentially reaching up to 1 billion dirhams. This creates a pressing need for businesses in the digital finance space to thoroughly assess their regulatory obligations to avoid severe financial repercussions.
Impact on Self-Custodial Wallet Users
While individual users of self-custodial wallets will not be directly impacted by this legislation, companies that facilitate payment services through these wallets must ensure they adhere to the new regulatory framework. This comprehensive approach is viewed as a pivotal move to enhance the integrity and security of the UAE's digital finance ecosystem.
The Avalanche Policy Coalition has established a new advisory council to influence digital asset regulations, a move that contrasts with the UAE's recent regulatory changes in the digital finance sector. For more details, see read more.
