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In 2024, the UAE strengthens its position as a digital asset hub with notable regulatory advancements and innovative banking solutions, but faces challenges in keeping pace with global developments.
In 2024, the United Arab Emirates (UAE) reaffirmed its status as a leading hub in the realm of digital assets. Significant strides in regulatory frameworks, innovative banking solutions, and expansions in licensing for prominent cryptocurrency exchanges illustrated the country’s dedication to cultivating a thriving digital economy. The establishment of stablecoin regulations by the Central Bank of the UAE (CBUAE) and initiatives from Zand Bank, along with the Dubai Virtual Assets Regulatory Authority (VARA), highlighted how the UAE’s digital asset ecosystem is evolving as a benchmark for innovation and regulatory compliance.
Despite these advancements, challenges persist. As the United States is poised to enhance its crypto-friendly policies under new leadership, and regions such as Singapore and the European Union refine their regulatory approaches, the UAE will need to expedite its development to maintain a competitive advantage. This overview reflects on the UAE’s major achievements in digital assets throughout 2024 while identifying potential opportunities for 2025.
Regulatory Achievements: Significant Developments
One of the notable highlights of 2024 was the introduction of comprehensive stablecoin regulations by the CBUAE, a critical advancement for the UAE’s digital asset framework. This move created a structured approach for integrating digital payment tokens within the economy, signifying a proactive stance toward blockchain innovation.
A key accomplishment was the approval of Coin AE, the first AED-backed stablecoin licensed by the Central Bank, developed in collaboration with Mbank. This sets a benchmark for future projects and showcases the UAE’s commitment to creating a secure and compliant environment for digital assets.
Nevertheless, challenges remain as over five applications for stablecoin approvals await the Central Bank’s review, and the requirement for foreign currency-backed stablecoins to register is still not enforced. Although issuers like Circle are prepared for compliance, clarity on enforcement protocols in the coming months will be essential.
VARA’s Expanding Portfolio
In 2024, the Dubai Virtual Assets Regulatory Authority (VARA) strengthened its influence by licensing major international exchanges, including Binance, OKX, Crypto.com, and Bitpanda. This expansion solidified Dubai’s position as a hub for top-tier digital asset entities. The ecosystem, which now includes regional leaders such as CoinMena along with global platforms like GCEX, serves both retail and institutional markets.
A noteworthy event was the acquisition of BitOasis, a VARA-licensed exchange, by an international firm, marking a significant interest in the UAE’s digital assets sector. On December 18, VARA also announced the launch of ORO, a tokenized gold product developed on Fasset Exchange’s Layer 2 network, anticipated to bring $1 billion worth of tokenized gold on-chain. However, formal approvals for such tokenization projects have yet to be disclosed, indicating a cautious approach as VARA aims to establish a comprehensive regulatory framework before progressing further.
ADGM: Innovating Blockchain Regulation
The Abu Dhabi Global Market (ADGM) continued to be at the forefront of regulatory innovation for digital assets in 2024 with the introduction of a framework for foreign currency-backed stablecoins, offering issuers a clear compliance pathway. A significant highlight was granting a waiver to Paxos for its yield-bearing stablecoin, Lift Dollar, demonstrating ADGM’s support for innovative structures.
Additionally, ADGM has attracted global blockchain firms, most notably welcoming the IOTA Foundation and the TON Foundation into its regulatory ecosystem. Its Distributed Ledger Technology (DLT) Foundation Regime positions ADGM as a significant player in blockchain governance, though competition is increasing as RAK DAO introduces its DARe framework for Decentralized Autonomous Organizations.
Banking and Digital Assets: Progress with Caution
Zand Bank has emerged as a leader within the UAE banking sector for digital asset integration, becoming the first digital-only bank to obtain a custodian license from VARA, facilitating services for nearly all VARA-licensed Virtual Asset Service Providers (VASPs). Its ability to navigate the regulatory landscape has made Zand a crucial entity within the UAE’s digital assets framework.
Conversely, many traditional banks are maintaining a cautious stance. M2, a prominent exchange, recently formed partnerships with unnamed “leading banking institutions” to facilitate an AED on-ramp for digital assets, reflecting reluctance among banks to publicly engage with the sector.
While institutions like Commercial Bank of Dubai (CBD) and RAK Bank exhibit interest in digital asset opportunities, there has been limited progression regarding on-ramp and off-ramp activities for VASPs. Mbank, having participated in Coin AE, is expected to increase its involvement as blockchain integration expands across the financial landscape in 2025.
Looking Forward to 2025
The upcoming year is anticipated to be transformative for the UAE’s digital asset space, with a primary focus on stablecoins and payment frameworks. Enhanced enforcement of stablecoin regulations and broader approval processes are likely to support more extensive adoption. Fintech companies and payment applications are expected to deepen their integration with blockchain technology, leading to more seamless solutions. Licensing activity from VARA and ADGM is also expected to rise as their regulatory frameworks evolve, promoting innovation and enhancing trust.
As the United States aims to establish itself as a crypto-friendly powerhouse, the UAE will need to continue advancing its digital asset initiatives. By enhancing tokenization efforts, fostering collaboration between blockchain and traditional finance, and setting regulatory standards, the UAE can strengthen its global standing in the rapidly changing landscape of digital assets. While a solid foundation has been established, the path ahead will be crucial in determining whether the UAE can sustain its leadership in this evolving sector.
The 119th U.S. Congressional session begins with hopes for clearer regulatory frameworks in the crypto sector, following the election of pro-crypto lawmakers.
Authorities around the globe are intensifying their efforts to address the increasing prevalence of...
The Australian Securities and Investments Commission has released a consultation paper outlining proposed updates to its guidelines for digital assets, inviting industry feedback and aiming for enhanced clarity.
As policymakers focus on digital asset regulation globally, the Cayman Islands emerges as a leader with innovative frameworks and compliance measures, setting a precedent for other jurisdictions.