RAKBank Gets Green Light for Dirham-Backed Stablecoins
The United Arab Emirates’ fintech sector has been making major strides in recent years, and RAKBank’s latest initiative is set to add even more momentum to it. With the central bank’s in-principle approval, the institution is set to launch a dirham-backed stablecoin that promises to revolutionize the digital asset space in the country.
This development marks a major milestone for RAKBank as it is now poised to become the country’s first domestic bank to launch a regulated payment token. This move is particularly noteworthy as the central bank’s own Digital Dirham initiative is still facing challenges.
While there is still work pending for the stablecoin launch, including completing licensing, operational setup, and compliance requirements, RAKBank’s effort is set to pave the way for a new era in digital payments in the UAE. This also positions the bank as a major player in the global financial ecosystem.
Unveiling RAKBank’s Journey to Launching AED-Backed Token
According to the latest reports, the Central Bank of the UAE has provided in-principle approval to RAKBank to launch a dirham-backed stablecoin. While the bank still needs to complete licensing, operational setup, and compliance requirements, the approval allows the platform to become the first domestic bank to issue a regulated stable token.
As per the bank’s official statement, the stablecoin will be fully backed by UAE dirhams, ensuring one-to-one backing and full redemption at par value. To enhance transparency and security, the structure will be supported by audited smart contracts and real-time reserve attestations. This provides ongoing visibility into reserve levels for both supervisors and users.
Commenting on the CBUAE’s green signal for the bank to issue the stablecoin under the Payment Token Services Regulation, RAKBank CEO Raheel Ahmed noted,
“Receiving in-principle approval from the Central Bank of the UAE is an important milestone in our digital assets journey. It reflects our focus on innovation that is responsible, regulated and built on trust. It is another step in delivering banking that is digital with a human touch.”
Unveiling Key Features of RAKBank’s Token
Interestingly, the proposed dirham-backed stablecoin of RAKBank has several key features that make it more interesting and attractive. These features include its 1:1 peg, transparency, regulatory compliance, and diverse use cases.
In detail, the stable token is fully backed by AED reserves held in segregated, regulated accounts, ensuring stability and redeemability. The token boasts transparency as it is expected to undergo independent audits and real-time attestations via smart contracts. It will also be compliant with the central bank’s risk management and consumer protection requirements.
What is more compelling is the RAKBank stablecoin’s diverse use cases. The token is designed for digital payments, asset tokenization, and cross-border settlements. It is also expected to be potentially integrated into the bank’s crypto trading platform for retail access.
UAE’s Regulatory Framework for Stablecoins
Notably, the Central Bank’s Payment Token Services regulation, introduced in 2024, allows dirham-backed stablecoins to be used as payments in the UAE. The legislation also prohibits unbacked cryptocurrency and foreign currency stablecoins as a mode of payment in the country.
To issue a payment token, entities must publish a whitepaper and obtain explicit approval from the central bank. While banks are restricted from directly issuing payment tokens, they can do so through licensed subsidiaries or related entities that meet prudential and conduct requirements.
RAKBank intends to leverage this framework as part of its digital assets strategy, although the final issuance vehicle has yet to be disclosed.
