Commercial banks approved by the central bank to issue stablecoins, accelerating the maturity of the UAE digital asset ecosystem

RAKBank receives the Central Bank of the UAE’s preliminary approval on Wednesday to issue Dirham-pegged stablecoins. This is not only a significant breakthrough for RAKBank but also marks the official entry of traditional commercial banks into the digital asset space. According to the latest news, this stablecoin will adopt a 1:1 full collateralization mechanism, supported by Dirhams held in an independent regulatory account, and managed through audited smart contracts with real-time reserve proof functionality.

Stablecoin Design Fully Reflects Regulatory Requirements

Security Considerations in Technical Architecture

RAKBank’s upcoming stablecoin design fully integrates regulatory requirements and technical security:

• 1:1 full collateralization mechanism, ensuring each stablecoin is backed by corresponding Dirhams
• Funds stored in an independent regulatory account to prevent commingling risks
• Managed through audited smart contracts to ensure transaction transparency
• Real-time reserve proof feature, allowing users to verify fund reserves at any time

This design demonstrates the UAE Central Bank’s strict requirements for stablecoin security and sets a reference standard for other institutions interested in issuing stablecoins.

Strategic Progress and Coherence

The approval of this stablecoin is not a sudden move by RAKBank. According to sources, the bank has already taken steps in 2025 to enable retail customers to trade cryptocurrencies through regulated brokerage partners. From allowing customers to trade crypto assets to obtaining approval to issue stablecoins, RAKBank’s digital asset strategy has progressed gradually, reflecting a deep understanding of regulatory policies and showcasing the long-term commitment of commercial banks in the digital asset field.

Significance for the Middle East Region

RAKBank’s approval has broader industry implications. As an entity explicitly approved by the UAE Central Bank to issue stablecoins, RAKBank’s success could serve as a reference for other financial institutions in the Middle East. This indicates that the UAE Central Bank is establishing a relatively clear regulatory framework for stablecoins—neither outright banning nor laissez-faire—guiding the market through principled approvals.

This attitude sends a positive signal for the development of the digital asset ecosystem across the Middle East. When central banks explicitly support compliant stablecoin issuance, it will attract more traditional financial institutions to participate, further promoting the development of digital asset infrastructure in the region.

Summary

RAKBank’s approval by the UAE Central Bank to issue Dirham stablecoins reflects three key trends: First, traditional commercial banks are officially entering the stablecoin space, marking digital assets’ transition from the fringe to the mainstream; second, central bank-level regulatory frameworks are gradually improving, guiding market development through principled approvals; third, the Middle East is becoming an important participant in the stablecoin ecosystem. The future key question is whether other UAE financial institutions will follow suit and whether this model can be replicated in other Middle Eastern countries.