🇦🇪 UAE DeFi Regulation: New Law Brings Web3 Under Central Bank Control
The United Arab Emirates has delivered one of its most impactful regulatory decisions yet, introducing a sweeping law that places decentralized finance (DeFi) and key Web3 services directly under government supervision.
The legislation, Federal Decree Law No. 6 of 2025, marks a turning point for crypto operations in the UAE. Irina Heaver, founder of NeosLegal, described it as “one of the most consequential regulatory shifts” the region has ever seen.
She stressed that DeFi platforms, middleware, protocols, and even infrastructure providers could now be regulated if they support activities like payments, custody, trading, lending, or investment services — regardless of whether they claim to be “decentralized.”
🔐 “Just Code” No Longer Protects DeFi Protocols
Effective since September 16, 2025, the law applies to insurance, financial institutions, and digital asset-related services. Two clauses, Articles 61 and 62, clearly state that anyone facilitating a regulated financial activity “through any means, medium, or technology” must be licensed by the Central Bank of the UAE (CBUAE).
This means DeFi developers cannot defend themselves by saying the protocol operates automatically.
Stablecoin issuers, bridge networks, DEX platforms, liquidity routers, real-world asset tokenization projects, and similar protocols may now need official approval to operate. Violations can result in fines reaching 1 billion dirhams ($272.3 million) and potential criminal charges.
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🔓 New UAE DeFi Regulation Does NOT Ban Self-Custody Wallets
The legislation triggered confusion over whether it restricts self-custody wallet users. Legal experts clarified that individuals remain unaffected and can still use non-custodial wallets freely.
Crypto attorney Kokila Alagh of Karm Legal Consultants emphasized that the law does not ban self-custody, nor does it prohibit private storage of digital assets. Instead, it expands regulatory obligations for companies, particularly wallet providers involved in regulated activities like payments or transfer services.
“If a wallet provider enables payments or transfers for UAE users, licensing requirements may apply,” Alagh explained.
She also noted rising inquiries from companies seeking clarity as implementation begins. Official guidance from the central bank is expected, though no date has been confirmed.
🧩 Debate Grows as Industry Voices Clash Over UAE Crypto Policy
Some critics, including developer Mikko Ohtamaa, argued online that the move could “effectively ban” wallet applications and hurt the UAE’s crypto growth. He accused law firms of defending regulations for financial gain. However, Alagh responded that Karm Legal is actively requesting clarification from the central bank — a process that remains underway.
🌐 The UAE’s Crypto Future: Regulated, Not Restricted
With the September 2026 transition deadline approaching, companies operating in the region must now review their systems and assess whether they fall under the new regulatory perimeter. The message is clear: The UAE is not banning DeFi — it is standardizing it.
The nation continues positioning itself as a global digital asset hub, but now with stronger guardrails and accountability. In the era of UAE DeFi regulation, decentralization must play by the rules.
