ADGM Finalizes Stablecoin Rulebook, Setting the UAE’s Regulatory Benchmark

The Abu Dhabi Global Market (ADGM) has finalized its long-anticipated regulatory framework for fiat-referenced tokens (FRTs), marking a decisive moment in the UAE’s digital-asset evolution.
Effective January 1, 2026, the amendments issued by the Financial Services Regulatory Authority (FSRA) formally integrate stablecoin activities into ADGM’s Financial Services and Markets Regulations, transforming what was once a consultation regime into a fully enforceable law.

While the 2026 amendments also adjust the Fees Rules, the real significance lies in the scope and structure of the regulation itself. The framework now defines, in legal terms, all regulated activities involving FRTs—including issuing, managing, operating, and providing custody—and subjects them to the same prudential and conduct-of-business standards that apply to other licensed financial institutions within ADGM.

A New Legal Foundation for Regulated Stablecoins

This milestone gives ADGM a permanent, transparent rulebook for entities engaging with fiat-backed stablecoins, an area that has rapidly gained global attention.
Under the new regulation, FRTs are recognized as regulated financial instruments, issued and managed under FSRA supervision. Because ADGM is a financial free zone, these tokens are considered offshore instruments, designed primarily for cross-border and institutional use rather than circulation in the UAE mainland.

The move aligns ADGM’s oversight with international standards, ensuring that stablecoin issuers operating from Abu Dhabi meet capital, custody, and reserve management obligations comparable to those faced by licensed financial entities in major jurisdictions.

Paxos: The Early Precursor

Before the final rulebook came into force, Paxos Issuance MENA Ltd—a subsidiary of Paxos International—received FSRA approval to issue the Lift Dollar (USDL) in June 2024.
USDL was a yield-bearing stablecoin, fully backed by U.S. dollar reserves and distributed under ADGM’s oversight. It was an early demonstration of how the framework might work in practice, albeit under a tailored exemption.

Despite being a regulatory milestone, the project faced modest adoption and limited listings. By October 2025, Paxos announced it would cease minting USDL and wind down operations, citing a shift in strategic priorities. The license for “Issuing a Fiat-Referenced Token” was withdrawn in April 2025, though Paxos remains authorized for other financial activities within ADGM.

Rather than a failure, the Lift Dollar served as a regulatory pilot, helping shape the FSRA’s final framework and offering valuable lessons about scalability and product-market fit under strict compliance oversight.

The UAE’s Multi-Layered Model

ADGM’s finalized framework adds a new dimension to the UAE’s increasingly sophisticated regulatory mosaic.

• ADGM (Abu Dhabi) has now positioned itself as the institutional hub, focusing on licensed, offshore stablecoins and digital-asset infrastructure.
• VARA (Dubai), meanwhile, continues to supervise a broader crypto-asset market and remains the only UAE authority currently permitting stablecoins backed by foreign currencies to operate in the local market.
• The Central Bank of the UAE governs payment tokens and the ongoing Digital Dirham project, ensuring monetary stability and compliance across the federal layer.

Together, these jurisdictions illustrate the UAE’s federal innovation model—distinct, specialized regulators experimenting within clearly defined boundaries, while collectively advancing the country’s ambition to become a global hub for regulated digital finance.

A New Chapter for Regulated Digital Money

With its stablecoin framework now finalized, ADGM has transitioned from a regulatory sandbox to a fully operational legal environment for fiat-referenced tokens.
This evolution strengthens Abu Dhabi’s role in institutional digital-asset finance and signals that the UAE’s approach—though fragmented—is deliberate, adaptive, and increasingly mature.

The next challenge will be commercial: whether issuers can now achieve what early experiments like Lift Dollar could not—true market adoption backed by regulatory credibility. In a country where each financial center is building its own pathway to innovation, ADGM’s move cements its reputation as the regulatory benchmark for stability, structure, and long-term digital-asset strategy in the region.