A new financial law in the United Arab Emirates will bring decentralized finance and the broader Web3 into a regulatory framework, marking a significant turning point for the industry.
The UAE's new central bank law, "Federal Decree No. 6 (2025)," introduces "one of the most far-reaching regulatory shifts in the region's crypto industry," local crypto lawyer and NeosLegal founder Irina Heaver told Cointelegraph.
"It encompasses protocols, decentralized finance platforms, middleware, and even infrastructure providers, as long as they facilitate activities such as payments, exchanges, lending, custody, or investment services," Heaver said.
The lawyer stated that industry projects built or operated in the UAE should view this as a critical regulatory milestone and adjust their systems before the transition period deadline in September 2026.
The law has been published in the "Official Gazette" and will take effect on September 16, 2025. "Federal Decree No. 6" is a central bank law that regulates financial institutions, insurance businesses, and activities related to digital assets.
Key provisions, Articles 61 and 62, list activities that require a license from the Central Bank of the UAE (CBUAE), including crypto payments and digital value storage.
"Article 62 states that anyone who conducts, provides, issues, or facilitates licensed financial activities 'by any means, medium, or technology' falls under the CBUAE's regulatory scope," Heaver said.
In practice, this means that decentralized finance projects can no longer evade regulation by claiming to be "just code." She added, "The argument of being 'decentralized' does not exempt protocols from compliance."
Heaver indicated that protocols supporting stablecoins, real-world assets (RWA), decentralized exchange (DEX) functionalities, cross-chain bridges, or liquidity routing "may need to obtain a license." She also noted that enforcement has begun, with penalties for unlicensed activities including fines of up to 1 billion dirhams (approximately $272.3 million) and potential criminal sanctions.
As the UAE's new central bank law is directly related to providing "value storage services," Kokila Alagh, founder and managing partner of Karm Legal Consultants, told Cointelegraph that this legislation could impact cryptocurrency wallet providers.
Alagh mentioned that there is "considerable confusion" regarding whether the law affects self-custody or non-custodial wallets (designed to allow users to independently manage their assets without third-party involvement).
While some industry observers, including Mikko Ohtamaa from Trading Strategy, have suggested that the law effectively "bans" crypto and self-custody wallet applications in the UAE, Alagh and Heaver stated that this is not the case.
"The law does not prohibit self-custody nor restrict individuals from using their own wallets," Alagh said, adding that it "merely expands" the regulatory scope for companies.
"If wallet providers enable payments, transfers, or other regulated financial services for UAE users, they may need to obtain a license," she pointed out.
Alagh noted that Karm Legal has received numerous inquiries on this issue and added:
Ironically, Ohtamaa's post specifically criticized UAE lawyers, claiming their business "has no interest in the UAE."
"For independent law firms, anything that makes the UAE less attractive for crypto is a loss of revenue, and these lawyers are happy to confuse facts and legal texts just to ensure their annual bonuses," Ohtamaa argued.
Karm Legal's Alagh told Cointelegraph that the firm is actively following up with the CBUAE on this matter, but a specific date for clarifications from the regulatory body has yet to be determined.
Related: Bitcoin (BTC) drops to $87,000: Is it a buying opportunity or a "dead cat bounce"?
Original article: “UAE's New Financial Law Brings Decentralized Finance (DeFi) and Web3 Under Regulatory Scope”
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