The UAE is positioning itself as an attractive hub for digital assets, drawing in crypto businesses and institutional investors. Yet its ambition comes with a challenge: maintaining its reputation as an innovation-friendly jurisdiction while aligning with global standards.
The UAE’s crypto landscape is entering a new phase of maturity, as the country commits to implementing the OECD’s Crypto-Asset Reporting Framework (CARF) from 2027, while simultaneously bringing crypto, blockchain and decentralised finance (DeFi) activity under the direct supervision of the Central Bank of the UAE (CBUAE).
‘CARF may require substantial enhancements to existing systems’
‘The UAE has reached a pivotal moment in its evolution as a global crypto hub,’ says Joe David, CEO at accounting firm Nephos Group. ‘Importantly, the UAE is striking a pragmatic balance: it continues to attract innovation and crypto wealth while demonstrating it can meet emerging global standards.’
CARF readiness
In September, the UAE took a major step towards regulating the taxation of digital assets when it announced that it had signed up to the automatic exchange of information under CARF, which requires crypto-asset service providers – such as exchanges, brokers and certain wallet providers – to collect and report to tax authorities.
Kokila Alagh, founder of KARM Legal Consultants, says that, in practice, CARF will place ‘significant responsibilities’ on a wide array of intermediaries: ‘This may be operationally demanding and require substantial enhancements to existing systems.’
‘No one to date has really had a need to record the information in a uniform manner’
The biggest challenge, Alagh says, will be readiness. ‘Firms will need to upgrade their transaction-monitoring systems, data-privacy and compliance frameworks, internal controls and reporting infrastructure, and ensure staff are trained to handle tax-reporting obligations.’
Help from advisers
CARF implementation is expected to go live in 2027, with the first exchanges of information expected in 2028. This means that entities operating in or from the UAE will need to collect enhanced KYC data, track crypto-to-crypto transactions and disclose reportable information to local authorities for cross-border exchange.
‘No one to date has really had a need to record the information in a uniform manner,’ says Dion Seymour, crypto and digital assets technical director at Andersen LLP. ‘With CARF they are going to need to record it to get the aggregate information for each user on each type of token, number of transactions and where it has gone.’
Advisers will need to identify which clients fall within CARF’s definition of crypto-asset service providers. Whereas some may be obvious, such as exchanges and brokers, others may require more nuanced interpretation.
Regulation now depends on the nature of the financial activity rather than the medium through which it is delivered
CARF also requires traceability of crypto-to-crypto transactions, something many legacy systems were not designed for. Some crypto exchanges and wallet providers will require assistance from their advisers in upgrading compliance systems, verifying customer identities, and validating transactional data.
‘CARF will significantly raise the bar for transparency and cross-border reporting, and UAE exchanges and intermediaries will need to strengthen their data, onboarding and compliance infrastructures accordingly,’ says David. ‘Some of these smaller entities are going to have to build their systems to provide the data so people can actually deliver on the reporting they need to do.’
OECD alignment
CARF applies to Reporting Crypto-Asset Service Providers (RCASPs) – entities such as exchanges, brokers, custodians and wallet providers that facilitate in-scope crypto-asset transactions on behalf of customers.
The challenge for RCASPs, says Seymour, is recording all relevant information in a way that is OECD-compliant. But with 70 jurisdictions already committed to the CARF implementation and the first exchanges expected in 2027, Seymour says entities operating in the UAE will benefit from going in the second wave.
‘The UAE’s new banking law represents a significant step forward’
‘Many of the RCASPs entities out there are generally part of a wider group, so they should be able draw on experiences of implementation in early adopting jurisdictions and implementations within their wider corporate networks,’ he says.
Bold step
Even as CARF promises transparency across jurisdictions, the UAE has taken an equally bold domestic step. In September 2025, the country issued Federal Decree Law No. 6, a sweeping new law which recasts the regulatory perimeter for financial institutions and activities.
The new law brings virtual assets, DeFi protocols, stablecoins, tokenised real-world assets, decentralised exchanges, wallets and supporting blockchain infrastructure under the CBUAE’s authority. All crypto and blockchain organisations operating in or from the UAE must be licensed by the CBUAE, regardless of the technology used. This effectively removes the notion that operating via smart contracts exempts a project from regulation.
‘The broader intent is to create a more mature and unified regulatory environment’
Alagh says the UAE’s new banking law ‘represents a significant step forward in the country’s approach to modern and tech-driven finance’ and signals that regulation now depends on the nature of the financial activity rather than the medium through which it is delivered.
‘Services that effectively perform payments, lending, exchange or deposit-taking, whether through a bank, mobile application, blockchain platform or a decentralised protocol, are likely to fall under the CBUAE’s oversight,’ Alagh says.
Alagh adds that while detailed guidance on the approach is still awaited, the CBUAE is expected to assess emerging models on a case-by-case basis as it defines the regulatory perimeter.
‘The broader intent is to create a more mature and unified regulatory environment where technology-driven models and traditional institutions are subject to comparable standards of consumer protection, accountability and market integrity,’ she says.
Unified framework
What was once a patchwork of free-zone licences, informal compliance regimes and light-touch regulation is giving way to a more unified, transparent and internationally compliant framework.
Ultimately, Zainab Kamran, a Web3 lawyer at NeosLegal, says the UAE has managed to strike a well-calibrated balance between being a crypto-friendly jurisdiction and maintaining global regulatory credibility.
‘The real test will lie in consistent enforcement, supervision and cross-border alignment’
‘These frameworks are purpose-built, shaped with industry input, and designed to evolve alongside the sector. This contrasts with many jurisdictions where crypto regulations are reactive or layered on to outdated regimes,’ Kamran says,
What sets the UAE apart, according to Kamran, ‘is not only its willingness to regulate crypto, but its understanding that regulation must support innovation while safeguarding market integrity.
‘That said, as implementation continues and the market matures, the real test will lie in consistent enforcement, supervision and cross-border alignment.’
More information
Read our CPD article on the requirements of the Crypto-Asset Reporting Framework, Bringing transparency to crypto assets
