TLDR
- UAE’s new crypto law imposes penalties up to $136M for unlicensed tools.
- Self-custody wallets, blockchain explorers now require Central Bank licenses.
- Crypto firms face legal risk if offering services to UAE residents without a license.
- UAE expands regulatory reach, criminalizing unlicensed crypto marketing activities.
The UAE’s newly enacted Federal Decree-Law No. 6 of 2025 has raised alarms in the cryptocurrency community, especially among developers of self-custody tools. The law, which came into effect on September 16, significantly tightens regulations on crypto activities, introducing severe penalties for non-compliance. The new rules have sparked fears that the law effectively bans Bitcoin and other cryptocurrencies, particularly self-custody tools, and could force many companies to pull their services from the UAE market.
Tightened Regulations for Crypto Tools
The law mandates that any company offering basic crypto services, such as Bitcoin wallets or blockchain explorers, must obtain a license from the UAE Central Bank. Failure to comply with these licensing requirements could lead to severe penalties, including imprisonment and fines ranging from AED 50,000 to AED 500 million ($136 million).
According to legal experts, Article 170 of the new law criminalizes all unlicensed financial activity, which extends to anyone facilitating such activities via technology. This includes developers of software tools that could be used for cryptocurrency transactions. The law’s scope is extensive, affecting both local and international entities that provide services accessible to UAE residents.
Self-Custody Tools and Financial Infrastructure Under Scrutiny
One of the most concerning aspects of the new regulation is its impact on self-custody tools. Industry experts, such as developer Mikko Ohtamaa, have pointed out that the law makes it illegal to offer self-custodial Bitcoin wallets or even market-data tools like CoinMarketCap without the proper license. This could hinder the ability of users in the UAE to manage their crypto assets independently.
Article 62 of the law broadens the authority of the Central Bank to cover any technology that facilitates financial activities, directly or indirectly. This includes API services, wallet developers, blockchain explorers, and other infrastructure providers. As a result, even companies based outside the UAE could face legal risks if their products are accessible to users in the country.
New Restrictions on Marketing and Communications
The law also introduces new regulations around advertising and promoting crypto-related products. According to Article 61, promoting unlicensed financial activities is a criminal offense. This could mean that sending a simple email, hosting a website, or even posting a tweet about unlicensed crypto products might lead to legal consequences.
This provision significantly expands the regulatory scope of the law, potentially affecting global companies that market crypto tools or services to users in the UAE. As a result, businesses may face challenges in managing their communications with UAE residents and could withdraw from the market to avoid potential legal violations.
Impact on Dubai’s Crypto Ambitions
Dubai has positioned itself as a leading crypto hub in recent years, creating favorable regulations through free zones like VARA. However, with the introduction of the new federal law, these regulations are superseded, affecting even businesses operating within Dubai’s crypto-friendly jurisdictions.
The law’s broad language and severe penalties raise concerns that developers, exchanges, and wallet providers might stop offering services to UAE users, mirroring actions seen in other jurisdictions that have implemented similar restrictions. While companies have one year to comply with the law, there is uncertainty around how these new rules will be enforced, and whether they will discourage innovation in the region’s crypto industry.
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