qerranews 
The United Arab Emirates has introduced a landmark legal framework that officially pulls decentralized finance (DeFi) and Web3 infrastructure under financial regulation. The UAE’s new central bank law — Federal Decree Law No. 6 of 2025 — has become one of the most significant regulatory turning points for the crypto industry in the region.
According to Irina Heaver, crypto lawyer and founder of NeosLegal, this represents “one of the most consequential regulatory shifts” ever seen in the UAE. The law expands the authority of the Central Bank of the UAE (CBUAE), bringing a wide range of DeFi platforms, middleware providers, protocols, and infrastructure projects into regulatory scope.
DeFi Enters Regulation
The law became legally effective on September 16, 2025, marking a transition away from regulatory ambiguity. Article 61 and Article 62 of the decree clearly define activities that now require a license from CBUAE — including crypto payments, stablecoin services, digital stored value, lending, investment services, tokenized assets, and exchange operations.
Importantly, the decree states that any individual or entity facilitating financial activities “through any means, medium, or technology” falls under CBUAE regulation. Therefore, decentralized protocols can no longer avoid compliance by claiming they are not traditional companies.
Heaver emphasized that builders have until September 2026 to align their platforms with the new legal requirements — making this a pivotal compliance window for DeFi and Web3 projects operating in or targeting users in the UAE.
‘Just Code’ No Longer Works
One of the most critical consequences of the law is the end of the “just code” defense often used by DeFi protocols. Previously, projects claimed that their operations were decentralized, operated autonomously, and were therefore not liable for regulation.
That argument is no longer viable — as Article 62 clearly specifies that even decentralized protocols fall within regulatory perimeter if they facilitate financial activities.
This may affect platforms enabling:
- DEX and liquidity routing
- Stablecoin issuance
- Cross-chain bridges
- RWA (real-world asset) tokenization
- Lending, custody, or payments
Violating the law could lead to fines of up to 1 billion dirhams ($272 million) — and possible criminal penalties for unlicensed operations.
Wallets and Stored Value
The decree also sparked controversy regarding whether non-custodial wallets would be regulated. Some observers initially believed the law implied a de facto ban on self-custody, a core principle of Web3.
However, legal experts including Kokila Alagh, managing partner at Karm Legal Consultants, refuted that claim. According to Alagh, the law does not ban users from managing their own assets through self-custody wallets.
She clarified:
- Individuals can still hold their own assets
- The decree only applies to companies
- Wallet providers offering payments, transfers, or financial services to UAE users may need licensing
This means personal wallet use is unaffected, but Web3 wallet companies must now analyze whether they operate within the “stored value services” category.
Industry Wants Clarification
Despite receiving widespread attention, the decree has also triggered strong criticism from some industry participants. For instance, Mikko Ohtamaa criticized local legal firms, suggesting they were downplaying the decree’s impact to protect their business interests.
In response, Karm Legal stated it is directly following up with CBUAE for clarity — though no official timeline exists for formal guidance.
Industry observers believe further clarification is expected during the implementation phase, but companies should immediately start assessing licensing exposure and compliance risk.
Why This Matters
The UAE has positioned itself as a leading crypto hub with progressive frameworks like VARA in Dubai and ADGM in Abu Dhabi. This latest decree may appear strict, but legal experts say it’s part of a long-term strategy to make the UAE a regulated global hub for digital assets and Web3 finance.
Rather than banning decentralized finance, the UAE appears to be mandating accountability and transparency — especially for platforms that touch stored value, payments, or user custody.
This approach could push DeFi toward institutional compliance, aligning with growing global trends in regulated Web3 development.
The Road Ahead
With the September 2026 transition deadline, Web3 builders now face a strategic decision:
comply, restructure — or exit the market.
Key takeaways:
- The UAE is not banning crypto — it’s regulating it.
- Self-custody remains legal.
- DeFi teams must assess licensing obligations early.
- Wallet providers offering financial services must prepare for scrutiny.
- The decree signals maturity and accountability, not repression.
As governments worldwide evaluate the risks and benefits of decentralized finance, the UAE is setting a clear precedent: Web3 can grow — but only within a regulated framework.