Digital tokens have slowly shifted from trading platforms to daily transactions over the last few years. Some merchants began accepting stablecoins for purchases. Some firms launched AED-pegged tokens without clear legal standing. Others promoted untested crypto-backed products to UAE customers that had no regulatory checks. Without a clear rulebook, many questions began to arise, such as:
- Who is allowed to issue these tokens?
- What protects users if something goes wrong?
- Which assets back the tokens?
- How does the Central Bank supervise these services?
To bring clarity, control, and protection to this fast-moving space, the CBUAE(Central Bank of the UAE) has taken a bold regulatory leap with the introduction of the PTSR(Payment Token Services Regulation). Issued on June 7, 2024, the regulation defines a new framework for the licensing, registration, use, and oversight of payment token services in the UAE.
Recognizing the urgency of this regulation and the pressure it places on crypto businesses to comply, Antier, being one of the region’s leading digital asset consulting firms, has stepped forward to guide token issuers, custodians, exchanges, and wallet providers through the new rules.
This blog sheds light on the key highlights of the regulation and explains how Antier’s support can turn a complex requirement into a strategic advantage for businesses in the UAE’s digital asset market.
What are PTS(Payment Token Services)?
A payment token is defined as a virtual asset maintaining a stable value by reference to a fiat currency, either directly pegged to that currency or indirectly pegged to another token already pegged to that currency. Under the regulation, payment token services fall into three core activities:
- Issuance: First‐time sale or transfer of a token pegged 1:1 to a fiat currency
- Conversion: Buying or selling payment tokens in exchange for fiat or other tokens, acting as principal or agent.
- Custody & Transfer: Safeguarding customers’ tokens & private keys and executing transfers on their behalf.
Core Objectives
The central bank wants to keep token-based payment systems safe and working as expected. It aims to make sure that any money backing the tokens is held securely and can’t be misused. It introduces a licensing process that adjusts based on the risk involved. It also focuses on protecting the end user from unsafe or unclear token products. In a nutshell, CBUAE’s regulatory mandate is centered around the following key objectives:
- Ensure the safety and soundness of token-based payment systems.
- Preserve the value of reserves backing issued tokens.
- Enhance consumer protection through risk-based licensing.
- Foster innovation in the fintech and digital asset sectors.
Who Needs to Follow These Regulations?
The regulation applies to any person or business providing or promoting payment token services in the UAE. This includes
- Token issuers
- Conversion providers
- Custodians and transfer agents
- Wallet providers
- Merchants and promoters accepting or advertising tokens
Exclusions
The regulation excludes:
- Licensed banks or payment firms that are already regulated under other frameworks. Ex- SVF and Retail payment services
- IT infrastructure providers that do not directly offer token services.
- Intra-group token transactions between parent and subsidiaries.
Prohibited Activities
The regulation enforces several strict prohibitions to minimize misuse and regulatory arbitrage.
- No issuance or promotion of algorithmic stablecoins
- No use or promotion of privacy tokens
- No unlicensed token service activity
- Foreign tokens can only be used for virtual asset purchases, not general payments
- Banks cannot issue tokens directly
Licensing & Registration Requirements
To operate legally within the UAE, service providers must be licensed or registered by CBUAE under defined rules.
Applicants must pass fit and proper tests for senior management, robust risk management, and KYC/AML frameworks, and monthly reserve audits.
Reserve & Asset Backing Rules
Every token must be fully backed by money or other approved financial assets held in reserve. These reserves must match the number of tokens issued on a one-to-one basis. Here are the reserve conditions:
- Dirham tokens: Backed by AED deposits or equivalent assets.
- Foreign tokens: Backed by fiat in relevant foreign currency.
- Monthly attestations are required from an external auditor.
Promotions & Marketing Guidelines
The regulation introduces strict marketing guardrails to prevent deceptive practices:
- Only licensed/registered entities can advertise payment token services.
- Promotions for banned tokens like algorithmic stablecoins and privacy tokens are not allowed
- Promotions must disclose risks, token utility, reserves, and user rights.
Even companies already regulated by other UAE agencies, like the Securities and Commodities Authority, must follow these rules when promoting payment token services in the country.
Supervision and Enforcement
CBUAE maintains wide-ranging enforcement powers, including:
- Conducting audits, inspections, and investigations
- Suspending or revoking licenses
- Imposing fines for violations
- Requiring reporting or evidence of compliance on demand
All service providers must submit regular reports and notify CBUAE of key changes.
Final Thoughts
The CBUAE Payment Token Services Regulation is a landmark move that positions the UAE as a forward-thinking yet tightly regulated digital finance hub. It opens the door for stable and legally compliant tokenization models while slamming it shut on risky or opaque crypto instruments like algorithmic stablecoins. By laying down a clear framework for token issuance, custody, conversion, and acceptance, the regulation will catalyze trust and innovation in the UAE’s digital economy.
If you’re a fintech firm, merchant, or token issuer aiming to operate in the UAE, it is crunch time to act and ensure your systems, documentation, and compliance models align with CBUAE’s new framework. Antier, a renowned blockchain and digital asset consulting firm, is uniquely positioned to guide clients through the evolving regulatory landscape of the UAE.
Antier’s Legal & Regulatory Consulting Services
Regulatory Readiness Assessment
Antier conducts in-depth assessments of your platform or token model to evaluate:
- Licensing requirements under CBUAE’s framework
- Eligibility as a Dirham or Foreign Token Issuer
- Exposure to prohibited activities
License & Registration Application Support
From documentation to representation, Antier helps:
- Prepare and submit license/registration applications
- Build robust AML/KYC policies
- Draft token-related documents like the white paper and reserve audit reports
CBUAE Compliance Framework Design
Antier’s legal experts help clients set up systems for:
- Real-time transaction monitoring and reporting
- Reserve management in line with 1:1 backing rules
- Customer due diligence and data privacy measures
Audit & Attestation Preparation
Ensure you’re ready for regulator scrutiny with Antier’s help in:
- External audit coordination
- Technical and financial audits of reserves, wallets, and transaction logs
Promotion & Marketing Compliance
Avoid legal pitfalls by letting Antier:
- Vet your marketing campaigns
- Ensure that no unauthorized tokens are being advertised
- Align promotion strategies with the regulations’ rules
Ongoing Compliance Support & Advisory
With regulations evolving, Antier provides:
- Continuous updates on regulatory developments
- Quarterly compliance health checks
- Legal support for CBUAE interactions and clarifications
Whether you’re planning to issue a Dirham-pegged stablecoin, set up a token custody service, or onboard UAE merchants, Antier can help you navigate licensing, legal documentation, audits, and compliance implementation from start to finish.
