Payment Token Services (Stablecoins)

licensing sevices UAE

CBUAE

While CBUAE does not regulate all virtual assets, it has jurisdiction over Payment Token Services (Stablecoins), ensuring that firms dealing with digital payments operate within a secure, AML-compliant, and well-regulated financial system. CBUAE regulates Payment Token Services across the entire UAE, including the issuance, conversion, custody, and transfer of payment tokens. A Payment Token Service: means the performance by way of business of any of the following activities: (i) Payment Token Issuing, (ii) Payment Token Custody and Transfer, and (iii) Payment Token Conversion.

 

Regulated Virtual Assets Activities under CBUAE

CBUAE licenses and supervises entities engaging in Payment Token Services, which include:

  1. Payment Token Issuance: Issuing digital payment tokens that can be used as a medium of exchange. Tokens must be pegged to a fiat currency (such as AED or foreign currencies).
  2. Payment Token Conversion: Exchanging payment tokens into fiat currency or other tokens.
  3. Payment Token Custody: Secure storage and safekeeping of payment tokens on behalf of customers.
  4. Payment Token Transfer: Facilitating the transfer of Payment Token(s) or an interest in a Payment Token, whether or not such transfer is performed using Distributed Ledger Technology (DLT), and irrespective of any underlying obligations between the Payer and the Payee.

LICENSING

The Central Bank of the UAE serves as a gatekeeper for the financial industry by setting the minimum standards for market entry and changes through its licensing function. The responsibility for issuing the licensing policy is derived from the Central Bank Law, which grants the CBUAE the authority to license, govern, and supervise financial institutions in the UAE. Applicants seeking to obtain a license must submit the official application forms and supporting documents to the Licensing Division in accordance with the requirements.

Companies and individuals are required to seek permission from CBUAE before conducting any regulated activities. Banks can obtain a license for their operations by applying through the online platform provided by CBUAE.

Types of Licences

Here are the different kinds of licenses that the CBUAE issues:

  1. Bank Licence (Conventional and Islamic Bank licence),
  2. Insurance,
  3. Finance companies,
  4. Exchange business,
  5. Monetary Intermediary,
  6. Representative Office,
  7. Stored Valued Facilities (SVF),
  8. Large-value Payment Systems (LVPS),
  9. Retail Payment Services,
  10. Retail Payment System,
  11. Loan-based Crowd Funding,
  12. Card Scheme
  13. Payment Token Services (Stablecoins)

New applicants and unlicensed businesses can contact the CBUAE to inquire about the licensing process and/or to apply for a licence.

The CBUAE may grant ‘in-principle’ approval to new applicants if their applications meet the necessary criteria. Applicants must fulfill the requirements outlined in the CBUAE’s ‘in-principle’ approval letter within one year of the letter’s issuance for the application to be considered successful.

An ‘in-principle’ approval cannot be regarded as the application’s final approval. Financial institutions cannot engage in activities that are subject to CBUAE oversight until they have been granted a licence through the application process. Even after issuing an ‘in-principle’ approval, the CBUAE is not compelled to provide the licence if the application does not meet the requisite parameters. The CBUAE will grant the necessary licence to candidates who have fulfilled all the requirements. In addition, the CBUAE will specify any limitations or requirements that the licensee must meet.