RAKBank Enters the UAE Stablecoin Race with Dirham-Backed Token Approval

RAKBank Secures Preliminary Approval for UAE Dirham-Backed Stablecoin

The United Arab Emirates continues to solidify its position as a global leader in digital finance with RAKBank becoming the latest traditional financial institution to enter the stablecoin arena. The bank recently received in-principle approval from the Central Bank of the UAE (CBUAE) to launch its own dirham-backed payment token, signaling a major shift as homegrown banks move to compete with international crypto firms.

This preliminary nod from the central bank indicates that RAKBank’s proposal meets the foundational regulatory requirements. To move toward a live issuance, the bank must now satisfy specific operational conditions and final compliance hurdles. Once launched, the payment token will maintain a strict 1:1 peg with the UAE dirham, with reserves held in segregated, audited accounts to ensure full transparency and security via smart contract technology.

Expansion into the Digital Asset Frontier

This initiative represents a significant evolution in RAKBank’s long-term digital strategy. Building on its previous efforts to allow retail customers to trade digital assets through regulated brokerages, the move into stablecoins highlights the bank’s commitment to building a regulated and trustworthy ecosystem for on-chain finance. According to group CEO Raheel Ahmed, this milestone reflects the institution’s dedication to “responsible innovation” within the fast-growing UAE market.

The UAE’s regulatory landscape has paved the way for such advancements. With agencies like the CBUAE and the Virtual Assets Regulatory Authority (VARA) establishing clear frameworks, the country is fostering a diverse ecosystem. Policymakers view dirham-referenced tokens as essential tools for modernizing domestic payments, lowering the cost of remittances, and supporting the broader national digital economy goals.

A Competitive Landscape for Digital Payments

The stablecoin race in the UAE is heating up, with competition coming from multiple sectors. Telecom giant e& (formerly Etisalat) is already piloting its “AE Coin” for bill payments, while global heavyweights like Circle and Ripple have secured local approvals for their respective tokens. RAKBank’s entry ensures that traditional banking institutions remain at the forefront of this technological pivot, especially within the specialized Web3 hub of Ras Al Khaimah.

Despite the excitement, several technical details remain to be seen, such as which blockchain the bank will select and how seamlessly the token will integrate with global financial rails. The ultimate success of the project will depend on market adoption—specifically whether businesses and consumers find enough incentive to switch from traditional cash and wire transfers to a blockchain-based dirham for their daily financial needs.

What is RAKBank’s dirham-backed stablecoin?

RAKBank’s dirham-backed stablecoin is a digital payment token that will maintain a 1:1 peg with the UAE dirham. The bank has received preliminary approval from the Central Bank of the UAE to issue this token, which will be backed by reserves held in segregated, audited accounts and secured through smart contract technology. This allows users to transact using a blockchain-based digital version of the national currency with the stability and trust of traditional banking.

How does RAKBank’s stablecoin differ from other digital payment options in the UAE?

RAKBank’s stablecoin represents a traditional bank’s entry into the digital asset space, competing with both telecom initiatives like e&’s “AE Coin” and international crypto firms such as Circle and Ripple. The key difference is that RAKBank brings established banking infrastructure, regulatory compliance, and customer trust to the stablecoin market. Being backed by a licensed financial institution and regulated by the CBUAE provides an additional layer of oversight and security compared to some purely crypto-native alternatives.

What are the potential benefits of using a dirham-backed stablecoin?

Dirham-backed stablecoins offer several advantages including faster and cheaper cross-border remittances, modernized domestic payment systems, and enhanced financial inclusion. They combine the stability of the UAE dirham with the efficiency of blockchain technology, enabling near-instantaneous settlements and reduced transaction costs. For businesses, these tokens could streamline treasury operations and improve cash flow management, while consumers benefit from more accessible and transparent digital payment options that integrate seamlessly with the UAE’s broader digital economy initiatives.