Navigating Crypto Licensing in the UAE and the Rise of Shariah-Compliant Digital Finance

The UAE continues to lead the global conversation around digital assets, combining regulatory foresight with an innovation-friendly environment.

Whether it’s the growing number of jurisdictions offering crypto licenses or the emergence of Islamic banking models tailored for digital assets, the UAE is redefining the boundaries of how crypto and blockchain technologies can be responsibly integrated into modern finance.

This move is also welcoming investment as more and more investors are getting interested in business setup in the UAE in the finance sector.

This post explores how foreign and local businesses can secure a crypto license in the UAE, the compliance landscape, and the recent rise of Islamic crypto banking, highlighting how the UAE is shaping the future of ethical, inclusive digital finance.

Crypto Licensing in the UAE – Things to Know

- What Is it?

Crypto licensing in the UAE is governed across several jurisdictions, each with its own authority and regulatory approach. These include:

· Securities and Commodities Authority (SCA) – responsible for licensing and regulating virtual assets across mainland UAE.

· Dubai Virtual Asset Regulatory Authority (VARA) – oversees crypto activity in Dubai (excluding DIFC) under Dubai Law No. 4 of 2022.

· Dubai Financial Services Authority (DFSA) – regulates crypto within the Dubai International Financial Centre (DIFC).

· Financial Services Regulatory Authority (FSRA) – handles the crypto framework for Abu Dhabi Global Market (ADGM).

Each authority defines crypto assets differently. The SCA treats them as electronic records representing value, while DFSA focuses on their role as either payment or investment tools. The FSRA, meanwhile, refers to them as digital representations of value that are not legal tender but can be traded.

- Steps to Secure a Crypto License in the UAE

For businesses interested in launching crypto-related services in the UAE, obtaining a license involves the following steps:

1. Define Your Business Activity Start by clearly identifying what kind of services your business will provide like cryptocurrency exchange, digital asset custody, advisory, or issuance. The licensing authority and application process depend on this categorization.

2. Select the Right Jurisdiction Choose the most appropriate regulatory body based on where you intend to operate. For example, companies operating in ADGM would apply through FSRA, while firms going for business setup in Dubai would go through VARA.

3. Prepare Core Documentation Comprehensive documentation is essential to demonstrate the business’s legitimacy and capacity. This typically includes:

· A detailed business plan;

· AML and KYC policies;

· Risk management procedures;

· A clear corporate governance structure.

- Meet Capital and Financial Requirements

Different regulators have varied capital thresholds and fee structures. For instance, VARA requires license fees ranging between AED 40,000 (US$10,890) to AED 100,000 (US$27,225), depending on the activity.

- Submit Your Application

Applications are submitted directly to the chosen regulator. This is followed by background checks, fit-and-proper tests, and a review of submitted documentation.

- Approval and Ongoing Obligations

Once approved, licensees must adhere to strict ongoing requirements such as annual audits, quarterly reports, customer data protection, and adherence to AML/CFT regulations.

- Key Compliance Requirements

Crypto businesses operating in the UAE must align with the country’s robust AML and compliance laws. This includes:

· Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) for high-risk clients.

· Suspicious Activity Reports (SARs) submitted via the UAE’s goAML platform.

· Travel Rule compliance under Federal Decree-Law No. 20 of 2018 and Cabinet Resolutions No. 10 and 24 of 2019 and 2022, respectively.

· Record-keeping obligations, typically for up to eight years.

Non-compliance may lead to serious consequences, including hefty fines, license suspension, or even criminal liability.

- The Rise of Shariah-Compliant Crypto Banking

In a groundbreaking development for both fintech and Islamic finance, Ruya, a UAE-based Islamic digital bank, has become the first to launch a Shariah-compliant crypto trading service.

This feature, integrated into Ruya’s mobile app, allows customers to trade cryptocurrencies such as Bitcoin while staying in alignment with Islamic principles. Ruya’s platform is powered by Fuze, a licensed virtual asset provider, and is designed around Islamic values of fairness, transparency, and ethical investing.

The move not only expands access to digital assets for Muslims worldwide but also places the UAE at the forefront of inclusive financial innovation.

It highlights a significant step in reconciling crypto’s speculative nature with Islamic ethical standards.

- Key Takeaways for Crypto Licensing in the UAE

· Regulatory diversity: Each jurisdiction in the UAE has its own rules and authorities. Businesses must choose wisely based on scope and geography.

· Clear processes, but high standards: Documentation, compliance, and due diligence are non-negotiable.

· Strong emphasis on AML/CFT: Compliance with anti-money laundering rules is central to approval and ongoing operations.

· Growing ethical finance market: With initiatives like Ruya, the UAE is creating new opportunities for Shariah-compliant digital finance.

· Stablecoins are mainstreaming: Supported by regulators and embraced by the public, stablecoins are shaping the future of payment systems in the region.

Final Thoughts

As digital assets become an integral part of global finance, the UAE is strategically positioning itself as a safe, innovative, and forward-thinking jurisdiction for crypto businesses and company formation in the UAE.

For startups, fintechs, and institutional players alike, navigating the UAE’s regulatory landscape offers immense potential, but it also requires strategic planning, clear compliance, and a local understanding of how innovation and regulation intersect.

With the right guidance, crypto entrepreneurs can leverage the UAE’s frameworks to not only launch operations but help shape the next wave of ethical, inclusive, and global digital finance.