A new financial law in the United Arab Emirates will bring decentralized finance (DeFi) and the broader Web3 ecosystem under formal regulatory oversight—marking a pivotal shift for the industry.

The UAE Central Bank’s Federal Decree-Law No. 6 of 2025 introduces “one of the most significant regulatory changes” for crypto in the region, according to Irina Heaver, a local crypto lawyer and founder of NeosLegal, speaking to Cointelegraph.
“It covers protocols, DeFi platforms, middleware, and even infrastructure providers if they support activities like payments, exchanges, lending, custody, or investment services,” Heaver explained.

Industry projects built or operating in the UAE must treat this as a critical regulatory milestone and align their systems before the September 2026 transition deadline.
“We’re just code” is no longer a valid defense. Published in the Official Gazette and legally effective since September 16, 2025, UAE Federal Decree-Law No. 6 governs financial institutions, insurance businesses, and digital asset–related activities.

Key provisions—Articles 61 and 62—list activities requiring licensing from the Central Bank of the UAE (CBUAE), including crypto payments and digital stored-value instruments.

“Article 62 states that any party engaging in, offering, issuing, or facilitating licensed financial activity ‘by any means, media, or technology’ falls under CBUAE’s jurisdiction,” noted Heaver.

In practice, DeFi projects can no longer evade regulation by claiming to be “just code”—decentralization alone does not exempt protocols from compliance.
Protocols supporting stablecoins, real-world assets (RWA), DEX functionality, bridges, or liquidity routing “may require licensing,” she added. Enforcement is already active, with penalties of up to 1 billion dirhams (US$272.3 million) and potential criminal sanctions.
The law does not ban self-custody wallets. Since it directly regulates stored-value services, crypto wallet providers may be affected, per Kokila Alagh, founder of Karm Legal Consultants.

Yet the law does not prohibit self-custody nor restrict individuals from using personal wallets—it merely expands the regulatory perimeter for businesses.
If a wallet provider enables payments, transfers, or other regulated financial services for users in the UAE, licensing obligations may apply.
While commentators like Mikko Ohtamaa argue the law amounts to a “de facto ban” on non-custodial wallets, Alagh maintains this is a misreading—and her firm is actively seeking formal clarification from the CBUAE.

VECS Commentary
Well-designed regulation can anchor legitimacy and foster trust—but when poorly calibrated, it risks stifling the very innovation it seeks to channel. The UAE’s approach signals maturity: it avoids blanket prohibition while demanding accountability from entities, not individuals. Still, success hinges on ongoing, transparent dialogue between regulators and builders. True progress lies not in control alone, but in co-creation—where law empowers technology, and technology informs law.