It feels like we’ve been watching the UAE’s digital asset space hold its breath for a while now, waiting for the big banks to really step in. On Wednesday, the National Bank of Ras Al Khaimah (RAKBank) finally made that move.
In a massive shift for the local financial sector, RAKBank confirmed it has received in-principle approval from the Central Bank of the UAE (CBUAE) to issue a dirham-backed stablecoin. This isn’t just another fintech press release; it is the first time a conventional bank here has secured this specific nod under the CBUAE’s new Payment Token Services Regulation.
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A Milestone for RAKBank Digital Currency Strategy in the UAE
Let’s be clear about what “in-principle” means. The bank hasn’t launched the token yet—they still have to tick a few final regulatory boxes. But the intent is obvious. RAKBank is moving from just letting people trade crypto (remember their deal with Bitpanda last year?) to actually creating regulated digital tender.
Raheel Ahmed, the Group CEO, put it simply in the bank’s statement, calling this a “pivotal moment.” He noted that the RAKBank UAE stablecoin approval is about building innovation on a foundation of trust. And honestly, that’s the missing piece in the crypto puzzle for most residents—trust.
How the RAKBank Stablecoin Works
So, what does this actually look like under the hood?
Unlike the volatile crypto assets that keep compliance officers up at night, this regulated stablecoin backed by UAE dirham is boring in the best possible way. It is designed to hold its value.
Here is the breakdown of the mechanics:
- 1:1 Peg: For every digital token minted, there is one real Dirham sitting in the bank. No algorithms, just hard cash.
- Segregated Funds: This is crucial. The reserves backing the token are kept separate from the bank’s own money. If you’ve followed the global crypto meltdowns over the last few years, you know why this matters.
- On-Chain Proof: They are using smart contracts to provide real-time transparency on those reserves. It’s a level of auditability traditional banking rarely offers.
- Speed: The end game is instant settlements. We are talking about cross-border payments that settle in seconds, not days.
The Bigger Picture: UAE Digital Currency Adoption
You have to look at this in the context of the Central Bank’s wider game plan. The UAE Central Bank stablecoin approval fits right into their “Financial Infrastructure Transformation (FIT) Programme.” The country is aggressively trying to digitize how money moves.
We’ve seen other players pop up recently—fintechs like ‘AED Stablecoin LLC’ and digital-first banks like Zand have been making noise. But RAKBank entering the arena changes the temperature. It signals that stablecoin use cases in UAE payments are ready for the mainstream economy, not just for tech enthusiasts. It legitimizes the stablecoin ecosystem UAE in a way only a legacy bank can.
Minute Details: The Approval Timeline & Facts
For those tracking the specifics, here is the snapshot of the announcement:
- The News: RAKBank secures in-principle approval for Payment Token Issuance.
- The Watchdog: Central Bank of the UAE (CBUAE).
- The Regulation: Payment Token Services Regulation (PTSR).
- Announcement Date: January 7, 2026.
- The Product: AED-denominated Payment Token (Stablecoin).
- The Goal: Instant settlements, remittance, and cutting transaction friction.
- Context: Follows RAKBank’s 2025 move to enable crypto trading for account holders.
What This Means for UAE Residents
Living here, we are used to apps making life easier, from government services to grocery delivery. Banking has been catching up, but cross-border transfers can still be a headache.
The CBUAE payment token license effectively clears the way for a digital dirham that moves as fast as an email but is as safe as a bank deposit. Unlike using offshore tokens like USDT, which exist in a bit of a regulatory grey zone, this has federal oversight.
As the stablecoin regulatory requirements UAE tighten up, I expect we will see this integrated directly into the RAKBank app sooner rather than later. It’s a bold step, and it sets a high bar for the other banks watching from the sidelines.
