The UAE is moving quickly to bring stablecoins into its financial system with new regulations. The Central Bank of the UAE has rolled out the Payment Token Services Regulation (PTSR). The rules would apply to all dirham-backed stablecoins used for domestic payments. The rules came into force on August 31, 2024, making the UAE one of the most regulated stablecoin markets in the Gulf.
Under the framework, only licensed entities can issue dirham-backed stablecoins according to a Gulf News report. Issuers must keep reserve assets separate from their own funds and submit to monthly audits by external firms. They are also required to maintain at least Dh15 million in initial capital, along with additional capital linked to the number of tokens in circulation.
The regulation bans algorithmic stablecoins and does not allow stablecoin holders to earn interest or rewards. Foreign stablecoins face limits as well and cannot be used to pay for goods and services inside the UAE, except for virtual assets.
Dirham-backed stablecoins are already being used across the country. In December 2024, the central bank approved AE Coin as the UAE’s first fully licensed stablecoin. By January 2026, AE Coin had been added to Network International’s payment and e-commerce systems. This allows merchants across the UAE to accept the digital token for in-store and online payments.
Banks are now preparing to play a larger role in the stablecoin ecosystem. First Abu Dhabi Bank, ADQ, and International Holding Company announced plans in 2025 to issue a regulated stablecoin. Digital bank Zand launched its stablecoin in November 2025, while RAKBANK received initial approval in January 2026, showing growing interest from lenders.
S&P Global Ratings said the framework opens new business options for banks, including issuing stablecoins, managing reserves, and offering wallet services. While some traditional payment fees may face pressure, new digital services could help balance revenue.
The agency added that stablecoins are unlikely to replace savings accounts since they cannot pay interest. It also said the new rules are not expected to pose risks to the UAE banking system, as regulators remain focused on stability.
Many countries worldwide are struggling with crypto because the rules are unclear. The UAE has done the opposite by making the rules strict but fair. The country has set a ‘gold standard’ for the world economies in crypto, in particular, stablecoins.
By banning ‘algorithmic’ tokens (which can crash easily) and requiring monthly audits, the UAE is building trust. While this isn't a high-growth investment tool, it is a huge step forward for financial technology. We are moving toward a world where "sending money" feels as instant as sending a text message, and the UAE is leading that charge.