The UAE Fintech space has seen many recent changes such as CRMF (Cyber Risk Management Framework), Nebras for Open Finance, and FRT – Fiat Referenced Token Framework. The FRT framework applies in the UAE (specifically ADGM) now due to the growing use of stablecoins as payments, creating financial stability risks that require regulation for investor protection and market confidence, while fostering responsible innovation and positioning the UAE as a leading digital asset hub.
Established primarily by the Central Bank of the UAE (CBUAE) and further refined by the Abu Dhabi Global Market (ADGM), this framework is designed to bridge the gap between traditional fiat currencies and the digital world.
This article covers what are fiat referenced tokens and what is the FRT framework about.
What are Fiat Referenced Tokens?
A Fiat Referenced Token (FRT) is a specific category of stablecoin that maintains a stable value by referencing a fixed amount of a single fiat currency (such as the UAE Dirham or the US Dollar). Unlike speculative cryptocurrencies, FRTs are designed to function as a reliable medium of exchange and a store of value.
The core promise of an FRT is redemption at par: holders have the right to redeem their tokens for the referenced fiat currency from the issuer on demand. To ensure this is possible, regulators require issuers to back these tokens with high-quality, liquid reserve assets.
Recent Developments in Fiat Referenced Token Framework
The regulatory framework for Fiat-Referenced Tokens (FRTs), also known as stablecoins, has recently become clearly applicable in the UAE through frameworks established by various regulatory bodies. This includes the Financial Services Regulatory Authority (FSRA) in the Abu Dhabi Global Market (ADGM), the Virtual Assets Regulatory Authority (VARA) in Dubai, and the Central Bank of the UAE (CBUAE).
Here is a breakdown of the recent developments:
Abu Dhabi Global Market (ADGM) – FSRA
The FSRA in the ADGM has a dedicated and evolving framework for FRTs:
- Existing Framework: A framework for the issuance of FRTs has been in place since December 2024, which includes robust standards for reserve assets, governance, and redemption rights.
- Recent Enhancements: The FSRA finalized a significant expansion of its framework for ‘Regulated Activities’ involving FRTs in October 2025. These new rules, which cover custody, intermediaries, and other related services, became effective on January 1, 2026.
- Key Feature: The ADGM framework uniquely allows for yield-bearing stablecoins, positioning it as a global first mover in this area.
Also, read What are ADGM Fintech Rules – A Strategic Guide to Fintech Licensing Framework 2026
Dubai – VARA and DFSA
Dubai operates with two main regulatory authorities for virtual assets:
- VARA (Virtual Assets Regulatory Authority): For areas outside the Dubai International Financial Centre (DIFC), VARA updated its issuance rulebook in May 2025 to include dedicated rules for Fiat-Referenced Virtual Assets (FRVAs). VARA categorizes FRVAs as a Category 1 issuance and sets explicit obligations on reserves, redemption, and governance.
- DFSA (Dubai Financial Services Authority): Within the DIFC financial free zone, the DFSA regulates crypto tokens. New rules taking effect in January 2026 place responsibility on firms to determine and monitor which ‘Fiat Crypto Tokens’ are suitable for use within the DIFC, following specific recognition criteria.
Central Bank of the UAE (CBUAE)
The CBUAE also plays a crucial role with its Payment Token Services Regulation (PTSR), which became effective on August 31, 2024.
- Scope: The PTSR governs the issuance and use of ‘Payment Tokens’ (which function like stablecoins) across the wider UAE, outside of the financial free zones (ADGM and DIFC).
- Dirham Tokens: Tokens referencing the UAE Dirham (AED) fall under the exclusive purview of the CBUAE, not VARA or FSRA. Banks are prohibited from issuing these directly but can do so through licensed subsidiaries.
Key Requirements for FRT Issuers
To obtain a license under the Fiat Referenced Tokens framework, issuers must meet rigorous standards designed to prevent the ‘stablecoin de-pegging’ events seen in global markets in recent years.
- Reserve Assets: Issuers must maintain a 1:1 reserve of high-quality liquid assets (HQLA). This typically includes cash held at regulated banks and short-term government debt. These assets must be segregated from the issuer’s own corporate funds.
- Redemption Timelines: In the ADGM framework, issuers are generally required to complete redemptions within T+2 (two business days) to ensure liquidity for the user.
- White Paper Disclosure: Every issuer must publish a comprehensive white paper detailing the technology used, the risks involved, and the specific mechanics of how the peg is maintained.
- Independent Audits: Monthly or quarterly attestations by independent third-party auditors are mandatory to prove that the reserves actually exist and cover the tokens in circulation.
Why This Framework Matters for UAE Fintech
The introduction of the Fiat Referenced Tokens framework is a massive win for the UAE fintech ecosystem. By providing legal clarity, the UAE is attracting global giants like Paxos and Circle to set up regional operations.
For businesses, it means lower transaction costs for cross-border remittances, a huge sector in a country where 90% of the population are expats. For consumers, it provides a safe, regulated way to hold digital ‘Dirhams’ or ‘Dollars’ without the volatility of Bitcoin.
As we move through 2026, the Fiat Referenced Tokens framework will likely become the ‘gold standard’ for digital payments in the Middle East, ensuring that the UAE remains at the forefront of the global digital economy while maintaining the highest levels of financial integrity.