UAE’s new financial law pulls DeFi and Web3 into regulatory scope
News Summary
The UAE's new financial law, Federal Decree Law No. 6 of 2025, has come into effect, bringing decentralized finance (DeFi) and broader Web3 activities into its regulatory perimeter, marking a significant shift for the crypto industry in the region. Effective since September 16, 2025, with a transition deadline of September 2026, the law requires protocols, DeFi platforms, middleware, and even infrastructure providers to obtain a license from the Central Bank of the UAE (CBUAE) if they enable activities such as payments, exchange, lending, custody, or investment services. Lawyers confirm that claims of being “just code” or “decentralized” are no longer valid defenses for avoiding compliance. While some observers speculated the law might lead to a de facto ban on crypto and self-custodial wallets, legal experts clarify that it does not ban self-custody for individuals but rather expands the regulatory scope for companies offering financial services. Unlicensed activities can face penalties up to 1 billion dirhams ($272.3 million) and potential criminal sanctions.
Background
The UAE has long aimed to be a global leader in digital assets and fintech. Previously, the UAE regulated cryptocurrencies and digital assets through various free zones like Dubai's Virtual Assets Regulatory Authority (VARA) and Abu Dhabi Global Market (ADGM), primarily focusing on centralized entities and specific free zones. This new Federal Decree Law is a central bank law designed to unify and expand the regulation of financial institutions, insurance business, and digital asset-related activities across the entire nation. This move reflects a growing global trend of regulatory scrutiny over decentralized finance, aiming to provide a clearer legal framework and consumer protection for the burgeoning crypto ecosystem.
In-Depth AI Insights
What are the strategic intentions behind the UAE's timing for this comprehensive regulation of DeFi and Web3? - The UAE likely aims to attract high-quality Web3 projects and institutional capital, rather than speculative or high-risk activities, by providing a clear and stringent regulatory framework. This aligns with its ambition as a global financial hub, fostering innovation while ensuring financial stability. - This move could also lay the groundwork for interoperability with other major jurisdictions (e.g., EU's MiCA regulation or potential US legislation), thereby enhancing the UAE's standing in the global digital asset landscape. How might the