UAE Central Bank Extends Full Oversight to DeFi and Web3 Platforms Under New Federal Law

The United Arab Emirates has dramatically expanded its financial regulatory perimeter with Federal Decree-Law No. 6 of 2025, effective September 16, 2025, placing all decentralized finance (DeFi) activities, Web3 platforms, and distributed-ledger-based financial services under the direct supervision of the Central Bank of the UAE (CBUAE).

What the New Law Covers

The legislation treats any entity offering financial services — including payments, lending, asset management, or virtual-asset-related activities — as regulated, regardless of whether the service is delivered through traditional infrastructure or via smart contracts, dApps, or decentralized protocols.

Key provisions:

• Mandatory licensing for any entity conducting regulated financial activities in or from the UAE
• Minimum capital, risk-management, and governance requirements
• Full compliance with AML/CFT, consumer protection, and operational-resilience standards
• Penalties for non-compliance reaching AED 1 billion (~$272 million)

Existing operators have a one-year grace period (until approximately September 2026) to obtain licenses or cease UAE-facing activities.

Scope and Territorial Reach

Unlike previous frameworks that largely delegated virtual-asset regulation to financial free zones (DIFC, ADGM, and VARA), the new federal law asserts nationwide authority. It explicitly overrides free-zone exemptions for activities classified as traditional financial services, even when executed on-chain.

This means:

• Pure DeFi protocols accessible to UAE residents now fall under CBUAE jurisdiction
• Lending pools, decentralized exchanges, and yield aggregators must be licensed if they serve UAE users
• Offshore projects targeting the UAE market are also subject to the regime

Separate Treatment for “Pure” Virtual Assets

Free zones such as DIFC (with its Crypto Token Regime) and ADGM continue to regulate native virtual assets (e.g., Bitcoin, Ethereum, and non-financial utility tokens) under their existing frameworks. However, any activity that resembles banking, payments, or investment services — even if fully on-chain — is now governed federally by the Central Bank.

Goals of the Reform

UAE authorities describe the move as necessary to:

• Ensure financial stability in an increasingly decentralized landscape
• Prevent regulatory arbitrage between mainland and free-zone jurisdictions
• Attract institutional capital by providing clear, comprehensive oversight

Industry Reaction

The law has triggered widespread discussion:

• Many DeFi projects have begun geoblocking UAE IP addresses or exploring licensed structures.
• Institutional players view the clarity as positive for long-term capital deployment.
• Developers argue the broad wording could inadvertently criminalize open-source protocol usage.

In summary, Federal Decree-Law No. 6 of 2025 brings the full spectrum of decentralized financial activity under Central Bank supervision for the first time, closing previous regulatory gaps and establishing the UAE as one of the most comprehensive — and strict — jurisdictions for on-chain finance worldwide.