RAKBANK Receives Central Bank Backing to Develop AED Stablecoin, Signalling Shift Toward Programmable Money

RAKBANK has received in-principle approval from the Central Bank of the UAE to develop an AED-backed stablecoin, a move that signals a growing role for regulated banks in issuing blockchain-based forms of money.

The approval allows the bank to proceed with regulatory and operational preparations for the stablecoin but does not authorise immediate issuance. Any launch would remain subject to further regulatory review and operational readiness, the bank said.

RAKBANK said the proposed stablecoin would be fully backed on a one-to-one basis by UAE dirhams, with reserves held in segregated accounts and redeemable at par value. The token would be supported by audited smart contracts and real-time reserve attestations to ensure transparency and compliance.

“Receiving in-principle approval from the Central Bank of the UAE is an important milestone in our digital assets journey,” said Raheel Ahmed, Group Chief Executive Officer of RAKBANK. “It reflects our focus on innovation that is responsible, regulated and built on trust.”

The bank did not provide a timeline for when the stablecoin might be launched, saying further updates would be announced once regulatory conditions are met.

The announcement comes as regulators worldwide seek to define how digital forms of money should operate within the traditional financial system, following years in which stablecoins largely emerged outside formal banking oversight.

How this fits into the future of money

The importance of the approval lies less in the immediate creation of a new payment token and more in what it indicates about the direction of financial infrastructure.

For decades, payments—especially cross-border transactions—have depended on layered banking networks that can be slow, costly, and operationally complex. Blockchain-based settlement offers a way to move value directly and almost instantly, but until now such systems have largely operated beyond the regulated banking framework.

By allowing a commercial bank to develop a stablecoin under central bank supervision, the UAE is signalling support for a model in which digital money moves on blockchain rails while remaining anchored to the existing financial system. In this approach, stablecoins are treated not as speculative crypto assets but as digital settlement instruments—essentially tokenised cash designed for payments rather than investment.

This structure allows regulators to maintain oversight of reserves, compliance, and redemption, while banks gain access to more efficient settlement technology. Rather than replacing the banking system, blockchain is used to modernise it, particularly for payments, trade finance, and institutional transfers.

The approach differs from central bank digital currencies, which often require new policy frameworks and broad public adoption. Instead, bank-issued stablecoins operate within current monetary structures, potentially allowing faster innovation without altering the role of central banks or commercial lenders.

Globally, countries are taking divergent paths. The United States has seen rapid growth in private dollar-backed stablecoins with limited regulatory clarity. Europe has moved more cautiously, prioritising consumer protection and oversight. China has adopted a tightly controlled, state-issued digital currency. The UAE’s model places regulated banks at the centre of digital money issuance, using supervision rather than restriction to shape adoption.

For RAKBANK, the initiative reflects both an expansion into digital payments infrastructure and a strategic response to how money is increasingly expected to move: instantly, digitally, and across borders, but under clear regulatory control.

Further details on pilot testing and potential use cases will be announced in due course, the bank said.