Tuesday, 14 October 2025
The United Arab Emirates has enacted a far-reaching reform of its financial regulation, granting its Central Bank new powers to supervise a broader range of companies involved in digital and technology-driven finance. The new law, which came into effect in September 2025, replaces the 2018 framework and represents a major shift in how the country oversees its rapidly modernising financial system.
The legislation significantly expands the Central Bank’s authority to include technology providers and platforms that support financial transactions, even when those companies do not issue traditional banking products themselves. This change means that businesses offering infrastructure or services that facilitate payments, digital tokens, or open-finance solutions will now fall under direct regulatory supervision.
The updated rules also introduce much higher financial penalties for violations. The maximum fine has been lifted from the hundreds of millions to the billion-dirham range, underscoring the government’s intent to strengthen compliance and deter unlicensed activity. Companies that continue to operate without proper authorisation may face severe financial and even criminal consequences.
Another notable aspect of the reform is its attention to governance and sustainability. The Central Bank now has an explicit mandate to promote responsible finance and environmental goals in its activities. At the same time, oversight of Islamic finance has been reinforced, with national religious rulings now binding on all local Shari’ah supervisory committees.
In keeping with the UAE’s growing ambitions in digital innovation, the law also gives the Central Bank formal authority to issue a digital form of the national currency, often referred to as the Digital Dirham. This provision creates a legal foundation for the potential introduction of a central-bank-backed digital currency in the future.
A new appeal body has been established to review disputes arising from regulatory actions, ensuring that businesses have a clear channel to challenge decisions and maintain confidence in the fairness of the system.
Market participants have been granted a one-year transition period to align their operations with the new requirements. During this time, the Central Bank is expected to release further guidance clarifying which activities require a licence and what exemptions may apply.
For the country’s expanding financial technology sector, the reform marks a decisive turning point. Companies that once operated in regulatory grey zones will now have to assess their position within the newly defined framework. The move is widely viewed as part of the UAE’s strategy to position itself as a global financial centre that embraces innovation while maintaining robust oversight.
By tightening its laws and adapting them to digital realities, the UAE has placed itself among the leading jurisdictions seeking to balance financial progress with stability and trust — a signal that the era of unregulated digital finance in the Gulf is drawing to a close.
