UAE's Stablecoin Ambitions Get Stronger: RAKBank Joins the Wave with Central Bank Green Light

The UAE stablecoin ecosystem is entering a new phase. RAKBank has secured in-principle authorization from the Central Bank of the UAE (CBUAE) to issue a dirham-backed payment token, marking another milestone in the region’s regulated digital asset framework. The approval, effective from January 7, opens the door for RAKBank to proceed—provided the bank meets remaining regulatory compliance and operational benchmarks.

This development isn’t happening in isolation. The UAE has been quietly building one of the Middle East’s most comprehensive digital asset infrastructures. The Central Bank, Abu Dhabi Global Market, Dubai’s Virtual Assets Regulatory Authority, and other government bodies have jointly crafted a regulatory framework that covers stablecoins, virtual asset service providers, and tokenized financial products. Within this ecosystem, dirham-pegged tokens serve a strategic purpose: upgrading the nation’s payment systems, propelling digital economy growth, and streamlining cross-border remittance flows in a region where money transfers are a critical economic pillar.

Technical Foundations Meet Regulatory Standards

RAKBank’s proposed stablecoin will operate under strict guardrails. Every token will be backed 1:1 by dirhams stored in segregated, regulated accounts. The system will run on audited smart contracts with continuous reserve verification—a design that blends blockchain transparency with traditional financial governance. For RAKBank’s Group CEO Raheel Ahmed, this approval represents validation of the bank’s approach to “responsible, regulated innovation built on trust,” signaling that digital assets don’t require abandoning regulatory discipline.

What makes this significant is the bank’s existing regulatory foundation. RAKBank is already licensed and supervised by the CBUAE, eliminating the need for a separate approval process. This incumbent advantage accelerates the bank’s path compared to crypto-native startups or international issuers seeking entry into the UAE market.

A Crowded But Structured Marketplace

RAKBank isn’t the only player mobilizing dirham stablecoins. Telecom operator e& (Etisalat) is running pilot programs for a regulated dirham stablecoin under the AE Coin branding, testing use cases in bill payment workflows. Meanwhile, international players have already secured approvals: Circle brought USDC to Abu Dhabi, while Ripple obtained authorization for Ripple USD—both targeting institutional clients and regional expansion strategies.

This multi-participant environment suggests the UAE is aiming for a competitive but supervised marketplace rather than a monopolistic structure. The presence of both domestic incumbents (banks, telecom) and international platforms (Circle, Ripple) indicates regulatory confidence in managing multiple stablecoin issuers simultaneously.

Ras Al Khaimah’s Broader Web3 Play

RAKBank operates within Ras Al Khaimah, a emirate aggressively positioning itself as a Web3 and digital economy hub. The emirate’s RAK DAO initiative introduced the DARe framework, granting DAOs formal legal recognition—a first in the region. The associated “Builder’s Oasis” accelerator, backed by a $2 million fund, supports AI, gaming, and blockchain ventures, creating an ecosystem conducive to innovation beyond banking alone.

This context matters: RAKBank’s stablecoin isn’t an isolated product but part of a broader regional strategy to attract digital economy participants and build infrastructure depth.

The Unresolved Questions

Not everything is settled. The blockchain infrastructure underpinning the token remains undetermined—will it deploy on Ethereum, a proprietary chain, or a hybrid model? Interoperability with established global stablecoin networks is equally unclear. The relationship between UAE federal regulations and free-zone regulations once real-world transactions migrate onchain presents another gray area.

Market adoption hinges on concrete answers. Corporates and consumers won’t organically integrate dirham stablecoins into daily payment and treasury operations without clear product integrations, cost efficiencies, and pricing incentives. Regulators and financial institutions are preparing for tokenization, but the friction points between legacy systems and blockchain-based settlement remain practical hurdles.

RAKBank declined to comment on implementation timelines or technical architecture details at publication.