The Central Bank of the UAE (CBUAE) has formally issued the UAE Payment Token Services Regulation. This act establishes a comprehensive framework for licensing and overseeing digital payment services, including stablecoins, within the UAE. This regulation sets out the guidelines and criteria for offering payment token services.
Licensing and Registration
The Payment Token Services Regulation outlines clear conditions for the issuance and maintenance of licenses or registrations for Payment Token Service Providers, including:
- Payment Token Issuance (Stablecoin Issuance)
- Payment Token Conversion
- Payment Token Custody and Transfer
- Entities holding licenses are required to adhere to the CBUAE’s ongoing supervision and reporting requirements.
Scope and Objectives
The regulations’ objectives include
- To ensure the safety, stability, and efficiency of payment token services, particularly stablecoins.
- To safeguard customers and prevent asset misappropriation.
- To foster consumer protection and promote innovation within the digital payment sector.
Exclusions
The regulation does not cover services governed by the Retail Payment Services and Card Schemes Regulation or the Stored Value Facilities (SVF) Regulation. It also excludes IT security services, communication network services, and internal transfers within payment systems.
Provisions
Algorithmic Stablecoins and Privacy Tokens
The regulation prohibits issuing, promoting, and operating services involving algorithmic stablecoins and privacy tokens, except those recognized as Dirham Payment Tokens or Foreign Payment Tokens.
Foreign Payment Tokens
Restrictions apply to the promotion and acceptance of foreign payment tokens as payment methods, ensuring compliance with defined regulatory standards.
Ongoing Supervision and Reporting Requirements
Entities holding licenses under the Payment Token Services Regulation must comply with various ongoing supervision and reporting requirements established by CBUAE:
Business Reporting
Providers involved in Payment Token Conversion and Custodianship must regularly report on the volume and value of their activities related to virtual assets that do not fall under the payment token category. The CBUAE will periodically specify specific details of these reporting obligations.
Complaints Management
Licensees must maintain a structured complaints management program and regularly submit reports to the CBUAE. These reports should include details such as the number of complaints received, their topics, and their current status (open or resolved), along with the time taken to resolve each complaint.
Ad-hoc Reporting
Licensees and registrants must adhere to any additional periodic or ad hoc reporting requirements mandated by the CBUAE. These may encompass specific events or operational changes requiring regulatory authority communication.
Regulatory Capital Requirements
Licensees must meet regulatory capital requirements delineated in Articles 13 to 15. The Central Bank reserves the right to impose additional requirements or adjust existing ones to maintain financial stability.
Final Words
The CBUAE has full authority to license, register, and oversee Payment Token Service Providers, including foreign entities. The official release of the Payment Token Services Regulation is an important milestone in the UAE’s digital economy transformation.
Frequently Asked Questions
What are Payment Token Services?
These tokens allow merchants and the PISP to identify the consumer without requesting the same payment information for each transaction.
What is UAE’s Digital Currency?
Digital dirham is UAE’s digital currency.
What is the Name of the UAE Central Bank?
The Central Bank of The UAE (CBUAE) is the central bank.
What is the Official Currency of Dubai?
The Dirham is the official currency of Dubai.
What Does RPSCs Mean?
RPSCs stand for Retail Payment Services and Card Schemes Regulation.
What is the Payment Service Provider of UAE Central Bank?
UAE Payment Gateway Service (UAEPGS) is CBUAE’s payment service provider.
Does Gift Card Work in the UAE?
Yes, gift cards work in the UAE.
