UAE Expands Financial Regulations to Include DeFi and Web3 Under Central Bank Oversight

The United Arab Emirates has enacted Federal Decree Law No. 6, a landmark legislation that significantly broadens the regulatory authority of the Central Bank of the UAE to encompass decentralized finance (DeFi) and Web3 technologies. This move marks a pivotal shift in the nation’s financial governance, effectively eliminating the ‘just code’ defense previously used by some entities to argue that decentralized protocols operate beyond regulatory reach. Under the new law, the central bank now holds explicit jurisdiction over DeFi activities, ensuring they align with national financial stability and security standards. Non-compliance with these regulations can result in severe penalties, including fines of up to $272 million, underscoring the UAE’s commitment to fostering a secure and transparent digital asset ecosystem. This regulatory expansion reflects the country’s proactive approach to integrating innovative financial technologies while mitigating risks associated with decentralized systems. Industry experts anticipate that this framework will enhance investor confidence and set a precedent for other nations considering similar regulatory measures in the rapidly evolving digital finance landscape.