Traditional banks enter the market: RAKBank approved by the Central Bank of the UAE to issue Dirham stablecoins

The United Arab Emirates is attracting traditional financial institutions to enter the digital asset space. RAKBank has received the principled approval from the Central Bank of the UAE to issue Dirham-pegged stablecoins, marking another exploration of sovereign currency stablecoins in the Middle East. This is not only a strategic upgrade for RAKBank but also reflects the UAE’s ambition to become a regional financial innovation hub.

Technical Framework of Stablecoins

The upcoming stablecoin from RAKBank adopts a relatively strict design, with key elements including:

• 1:1 full backing: each stablecoin is supported by an equivalent amount of Dirhams
• Independent regulatory account: collateral funds are stored in a separate regulatory account, isolated from the bank’s own funds
• Audited smart contracts: the code has been audited by a third party to reduce technical risks
• Real-time reserve verification: users can verify reserve adequacy in real-time

This design is not uncommon in the stablecoin field, but from a traditional banking perspective, it demonstrates a focus on compliance and transparency.

Multiple Interpretations of Strategic Significance

RAKBank’s Digital Asset Strategy

This is not a sudden decision by RAKBank. According to reports, the bank has allowed retail customers to trade cryptocurrencies through regulated brokerage partners since 2025. The approval of this stablecoin signifies a shift from passive support to active participation—upgrading from providing trading channels to issuing digital assets.

The UAE’s Regional Strategy

The UAE has been working to establish itself as a digital asset hub. The central bank’s support for stablecoins is not an isolated event but part of a broader strategic plan. By introducing sovereign currency-pegged stablecoins issued by traditional banks, the UAE is building a more attractive digital financial ecosystem.

Follow-up Questions to Watch

• When will the stablecoin be officially launched? Principled approval usually takes time before going live
• Will other UAE banks follow suit? This could trigger a wave of applications
• What are the use cases for the stablecoin? Cross-border payments, local transactions, or others?
• How does it relate to other countries’ central bank digital currencies?

Summary

RAKBank’s stablecoin approval is another example of traditional financial institutions embracing digital assets. For the UAE, this reinforces its position as a crypto-friendly region in the Middle East; for RAKBank, it marks an important milestone in its digital transformation strategy; for the industry as a whole, it indicates that sovereign currency stablecoins are gradually opening up from central banks to commercial banks. The next key step is whether this stablecoin can find real demand in practical applications.