Author: Liang Yu
Editor: Zhao Yidan
In November 2025, the Central Bank of the UAE officially implemented "Federal Decree No. 6," which comprehensively incorporates decentralized finance (DeFi), Web3 projects, stablecoin protocols, and more into the central bank's regulatory framework for the first time. According to a report by Sina Finance on November 25, violators may face fines of up to 1 billion dirhams (approximately $272 million).
This regulation is viewed by the industry as a milestone in global digital asset regulation, not only ending the "code-only" defense but also paving the way for traditional financial capital to enter the crypto space. Meanwhile, Dubai continues to solidify its status as a global wealth management center, with the scale of private capital under management expected to exceed $30 trillion by 2030. Against this backdrop, can the trillion-dollar sector of real-world assets (RWA) achieve breakthroughs under the new regulations? This article analyzes the details of the regulations, market data, and industry trends.
1. UAE New Regulations: From "Gray Area" to "Compliance First"
The UAE's "Federal Decree No. 6" came into effect on September 16, 2025, replacing the 2018 Banking Law and significantly expanding the central bank's regulatory authority over digital assets. The core of the regulation is to bring DeFi protocols, middleware, cross-chain bridges, and other decentralized entities into a licensing system. Any projects involving payment, exchange, lending, custody, or investment services must apply for a license from the central bank. For example, protocols supporting stablecoins or the tokenization of real-world assets (RWA), which may have previously evaded responsibility under the guise of "technological neutrality," must now comply with anti-money laundering (AML) and know your customer (KYC) standards.
It is noteworthy that the new regulations do not prohibit individuals from using self-custody wallets, but wallet providers offering payment or transfer services must obtain a license. This design balances innovation and risk, protecting user asset autonomy while preventing illegal financial activities. Additionally, the regulations have extraterritorial applicability; even if service providers are located outside the UAE, they must comply with the law if their users include UAE residents. This design aligns with the Financial Action Task Force (FATF) initiatives to close cross-border regulatory loopholes.
For violations, the law imposes severe penalties, with fines up to 1 billion dirhams (approximately $272 million) or criminal sanctions. Project parties must complete compliance adjustments by September 2026, with a one-year transition period providing a buffer for the market. However, whether this transition period is sufficient for project parties to complete complex compliance transformations remains to be tested by the market.
2. Opportunities and Challenges for RWA: A Trillion-Dollar Market Under Compliance Framework
Tokenization of RWA (real-world assets) is seen as a core scenario for the next wave of blockchain applications, essentially mapping traditional assets such as real estate, bonds, and commodities onto the blockchain in token form. According to the "RWA Industry Development Research Report · Industry Chapter 2025," as of June 2025, the total value locked (TVL) in RWA has reached $12.5 billion, a 124% increase from 2024. However, the development of RWA has previously been limited by unclear legal ownership, collateral liquidation risks, and especially institutional investors' reluctance to engage with the unregulated DeFi ecosystem.
The UAE's new regulations have removed some obstacles by clarifying the responsible parties for RWA. The regulations state that "code-only" cannot exempt compliance obligations, meaning that protocols providing technical support for RWA (such as issuance platforms and custodians) must bear clear responsibilities. For instance, an institution attempting to tokenize U.S. Treasury bonds can clearly ascertain whether its blockchain service provider holds a central bank license, thereby reducing legal risks. However, this clear delineation of responsibilities may also bring new challenges. According to analysis by international law firm Allen & Overy, compliance costs could account for 15-30% of a project's total budget, placing significant pressure on small and medium-sized enterprises.
The compliance of stablecoins provides a reliable payment infrastructure for RWA. The new regulations bring stablecoin protocols under regulation, requiring that payment tokens must be backed by dirhams and issued by approved entities. This is similar to the "100% reserve-backed stablecoin" requirement in the U.S. "GENIUS Act," providing RWA with a reliable value metric and settlement tool. However, such strict reserve requirements may also limit the flexibility of stablecoin issuance, somewhat stifling innovation.
The entry of traditional financial capital will further promote the prosperity of the RWA ecosystem. Data from the Dubai International Financial Centre (DIFC) shows that its asset management scale grew by 23% year-on-year in 2024, with over 500 wealth management companies established there. If institutions like Goldman Sachs and BlackRock participate in the RWA market, they will inevitably choose jurisdictions like the UAE that offer "regulatory certainty." According to a report from the DIFC, the global scale of private capital is expected to exceed $30 trillion by 2030, with sustainable investment and digital asset allocation as core driving forces. Under the compliance framework, RWA is expected to become a bridge connecting traditional capital with the blockchain ecosystem.
3. Global Regulatory Comparison: UAE's Differentiated Advantages and Limitations
The regulatory innovation in the UAE must be viewed in a global context. Currently, global RWA regulation presents two paths: "strong regulation, safety first" and "innovation-oriented, pilot first." The U.S., U.K., and Japan represent the former, maintaining high institutional thresholds in aspects such as rights confirmation, licensing, and trading circulation. For example, the U.S. SEC determines whether RWA tokens constitute "securities" through the Howey Test, bringing them under the purview of the Securities Act of 1933.
In contrast, regions represented by Singapore, the UAE, and South Korea focus on regulatory sandboxes, optimizing access mechanisms, and tax-friendly policies, reflecting an "innovation-oriented" regulatory approach. The UAE's differentiated advantage lies in its comprehensive coverage and flexible compliance design. For instance, while Hong Kong has included security tokens in its existing securities regulatory framework, it only opens the secondary market to qualified investors; the EU's MiCA regulation categorizes RWA into "asset-backed tokens" and "e-money tokens," prohibiting the sale of high-risk products to retail investors.
The UAE's regulatory framework also emphasizes integration with technological innovation. For example, its regulations allow testing tokenization solutions in regulatory sandboxes, similar to Singapore's "blockchain sandbox mechanism" and Canada's "provincial sandbox." However, the UAE goes further by extending the regulatory scope to middleware and infrastructure providers, forming a more comprehensive regulatory network. Nevertheless, this comprehensiveness may also bring regulatory burdens. According to research from the Cambridge Centre for Alternative Finance, overly broad regulatory scopes may expose innovators to unpredictable compliance risks.
In terms of cross-border regulatory coordination, the UAE faces significant challenges. Its extraterritorial applicability provisions may help close loopholes but could also lead to jurisdictional conflicts with other jurisdictions. For example, in the regulation of DeFi protocols involving users from multiple countries, regulatory overlaps or conflicts may arise. Ron Moroz, Deputy Governor of the Bank of Canada, has pointed out the "serious fragmentation of provincial regulation," a problem that is even more complex on a global scale.
4. Deep Integration of Technical Architecture and Compliance Requirements
The scaling of RWA relies on the deep integration of technical architecture and compliance requirements. According to the "RWA Industry Development Research Report · Industry Chapter 2025," successfully tokenized assets must meet three conditions: value stability, clear legal ownership, and off-chain data verifiability. Each of these conditions faces unique challenges at the technical implementation level.
In the asset onboarding phase, the new regulations require project parties to establish a compliance framework for off-chain asset ownership and on-chain token mapping. For example, real estate tokenization must address the issue of legal rights transfer, necessitating effective integration between blockchain systems and existing real estate registration systems. In practice, this cross-system integration faces both technical and legal barriers. Off-chain data verifiability relies on the interaction between IoT devices and the blockchain, and the reliability and security of this architecture still require further validation.
The compliance of smart contracts has become another focal point. The new regulations require DeFi protocols to adjust token economics, integrating AML/KYC checks and transparent governance mechanisms. For instance, licensed lending platforms must embed investor identity verification modules in their smart contracts to ensure that only qualified investors can participate in RWA token transactions. While this design enhances compliance, it also introduces centralized control points, which may conflict with the decentralized ethos of blockchain.
In the trading and settlement phase, regulated stablecoins become key tools. Tetra Trust, a digital asset custodian in Alberta, Canada, is preparing to issue a regulated stablecoin pegged 1:1 to the Canadian dollar after receiving approval. Similarly, the UAE's stablecoin regulatory framework may promote dirham-backed stablecoins to play a core role in RWA settlements. However, this reliance on a single fiat currency stablecoin system may also introduce new systemic risks.
5. Industry Applications and Market Outlook Analysis
The application of RWA tokenization across different industries shows diverse characteristics. In the renewable energy sector, the State Grid's "Electric e-Finance" platform utilizes blockchain for on-chain accounts receivable financing, effectively revitalizing green assets. The UAE-based Masdar company is also exploring financing clean energy projects through tokenization, providing important references for RWA applications in sustainable development.
Real estate tokenization shows great potential but also faces unique challenges. According to a PwC research report, real estate tokenization needs to address complex issues such as valuation standardization, liquidity management, and legal ownership confirmation. Some high-end real estate projects in Dubai have begun attempting partial ownership transfers through tokenization; if successful, this model could change the thresholds and liquidity of traditional real estate investment.
In the realm of intangible assets, the tokenization of intellectual property is on the rise. Some UAE startups are beginning to experiment with financing and trading copyrights, patents, and other intangible assets through tokenization. While this innovation holds great promise, its development still faces considerable uncertainty due to the subjectivity and volatility of intangible asset valuation.
From a market scale perspective, a report by the Boston Consulting Group predicts that by 2030, the scale of tokenized assets could reach $16 trillion. However, the realization of this prediction largely depends on the improvement of the regulatory framework and breakthroughs in technological bottlenecks. The UAE's new regulations provide important institutional guarantees for this rapidly growing market, but the specific implementation effects still need to be observed.
6. Impact of Compliance Costs on Market Competition Landscape
The implementation of the new regulations is expected to have a profound impact on the market competition landscape. The pressure of compliance costs may lead to increased market concentration, with resources skewing towards large institutions. According to McKinsey's analysis, compliance costs in the digital asset sector could account for 20-35% of total operating costs, placing a heavy burden on small and medium-sized enterprises.
The inherent conflict between decentralized ideals and centralized regulation still needs to be properly addressed. Aave founder Stani Kulechov pointed out that imposing traditional financial regulation on DeFi protocols may stifle innovation. This viewpoint is quite representative within the developer community. On the other hand, supporters argue that compliance is a necessary path for DeFi to integrate into mainstream finance. As UAE lawyer Irina Heaver stated, "Industry projects should view this as a key regulatory milestone, not an obstacle."
Cross-border service providers face unique compliance challenges. The extraterritorial applicability of the new regulations means that even if servers are located abroad, they must comply with local laws as long as they provide services to UAE residents. This requirement may encounter technical barriers and legal conflicts in practical implementation. For example, certain DeFi protocols may choose to block UAE users due to an inability to meet compliance requirements, which somewhat limits the options available to local users.
7. Future Outlook: A Development Path of Opportunities and Challenges
Under the impetus of the UAE's new regulations, the RWA ecosystem may present a diversified development path. The deep integration of compliant DeFi protocols and RWA will create new business models. For instance, licensed lending platforms could accept real estate RWA tokens as collateral, and compliant DEXs could list bond token trading pairs. While these innovations enhance efficiency, they also require corresponding risk control mechanisms.
The role of traditional financial institutions in the RWA ecosystem is noteworthy. Data from the Central Bank of the UAE indicates that dirham-backed stablecoins will become mainstream for RWA settlements after 2025, and banks and asset management companies may issue tokenized assets representing stocks and gold. This trend brings advantages of specialized operations but may also lead to monopolization of emerging fields by traditional financial powers.
The convergence of global regulatory standards will impact the sustainability of the UAE model. The G20 called for a unified regulatory framework for stablecoins and DeFi at the 2025 summit, and the UAE's practices may serve as a model for emerging market countries. However, until a global unified standard is reached, regulatory arbitrage phenomena between different jurisdictions may continue to exist.
From a technological innovation perspective, the development of privacy computing, zero-knowledge proofs, and other technologies may help resolve the conflict between compliance and privacy protection. These technologies can complete compliance verification without exposing all transaction information, providing new solutions for the integration of decentralized finance and regulatory requirements.
Through "Federal Decree No. 6," the UAE has not only reshaped the domestic digital asset regulatory landscape but also provided critical infrastructure for the trillion-dollar RWA sector. The balance achieved between "innovation" and "safety" makes it a testing ground for the evolution of global regulation. Despite the compliance challenges, a clear legal framework will undoubtedly accelerate the integration of traditional capital and blockchain technology.
For RWA participants, the UAE has transformed from an "optional location" to a "must-compete location," with a regulatory-driven wave of asset tokenization quietly approaching. In the future, as global regulatory frameworks further align and technological infrastructure improves, RWA is expected to truly realize the vision of "everything can be tokenized," reshaping the global financial ecosystem. However, the realization of this process requires continuous collaboration among regulatory agencies, technological innovators, and traditional financial institutions to find the best balance between protecting investor interests and promoting innovation.
Sources of some materials:
· "UAE's New Financial Law Brings Decentralized Finance (DeFi) and Web3 Under Regulatory Scope"
· "UAE's New Financial Law Includes DeFi in Regulatory Scope, Violators Face Fines Up to $272 Million"
· "UAE Cryptocurrency Regulations: Licensing and Compliance in 2025"
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