The UAE Capital Markets Authority (CMA) has introduced a new Virtual Assets Framework (VAF), effective 13 February 2026, establishing a unified regulatory regime for virtual asset activities. The framework replaces earlier rules while preserving existing licences during a one-year transition period, after which full compliance is required. From a banking and finance perspective, the VAF materially expands the regulatory perimeter and introduces greater clarity on how traditional financial services intersect with virtual asset markets.
Regulatory Scope and Activities
The VAF defines a broad set of regulated activities requiring CMA authorisation, including:
- Dealing as principal
- Dealing as agent
- Providing custody
- Arranging custody
- Operating a multilateral trading facility
- Providing investment advice
- Portfolio management
- Arranging investment deals
This captures a wide range of activities typically undertaken by banks, brokers and investment firms, particularly where they are engaging with digital assets through trading, structuring, or client-facing services. Notably, matched principal trading is generally treated as agency activity where exposure is incidental, which may affect how institutions structure execution models.
Virtual Asset Classification and Restrictions
A key feature of the VAF is its clear classification of virtual assets, coupled with categorical restrictions. Privacy tokens, privacy-enhancing devices and algorithmic tokens are fully prohibited from any regulated activity, reflecting a strong regulatory stance on financial crime and market stability risks. Utility tokens and NFTs are not outright banned but are significantly restricted, with participation generally limited to custody and trading on authorised platforms subject to CMA approval. This classification framework will be central to product design and asset selection for regulated firms.
Asset Admission and “Green List” Approach
The framework introduces a formal asset registration process, requiring regulatory approval before any virtual asset can be listed or traded on a multilateral trading facility (MTF). The CMA retains discretion to conduct independent due diligence and assess cross-border regulatory standards. Over time, the anticipated “Green List” of approved assets is likely to become a key reference point for banks and platforms when determining which assets can be offered to clients, effectively shaping market liquidity and product availability.
Trading Platforms and Market Conduct
Operators of MTFs are subject to enhanced obligations around market integrity, including surveillance for market abuse, financial crime controls and immediate reporting of suspicious activity. The framework also restricts the use of Organised Trading Facilities (OTFs) for virtual assets, reinforcing that trading must occur within regulated multilateral environments. These requirements align virtual asset trading more closely with traditional market infrastructure expectations and will be particularly relevant for institutions considering exchange or platform operations.
Product-Level Regulation
The VAF introduces targeted rules for specific activities such as margin trading, lending, staking and custody. Margin trading is tightly controlled, with mandatory close-out thresholds and retail client protections such as negative balance safeguards. Lending and staking are permitted only when conducted by licensed custodians or trading platforms providing custody, effectively limiting these activities to regulated balance sheets. For banks, this creates a clearer but more controlled pathway to offering yield-generating products linked to digital assets.
Custody and Client Asset Protection
Custody emerges as a central regulated activity under the VAF. Firms must ensure asset segregation, robust key management and technological resilience of underlying systems.
These requirements align closely with global expectations for digital asset custody and reinforce the role of regulated custodians – potentially including banks – as core infrastructure providers within the ecosystem.
Conduct of Business and Client Protection
The framework imposes enhanced conduct standards, including mandatory client classification, suitability and appropriateness assessments and strengthened disclosure obligations. Of particular importance is the requirement to provide detailed pre-contractual disclosures through a Key Characteristics Document, covering technical features, valuation and cross-jurisdictional regulatory treatment of assets. This represents a significant shift towards standardised, investor-focused disclosure in virtual asset markets.
Transitional Period and Implementation
The CMA has provided a one-year transition period during which existing firms may continue operating under current licence conditions but must prepare to comply fully with the new regime.
This period will be critical for institutions to reassess their business models, particularly in relation to asset eligibility, trading structures, custody arrangements and client-facing disclosures.
Key Takeaways
The VAF marks a significant step in integrating virtual assets into the UAE’s broader financial regulatory framework. For banks and financial institutions, the regime provides greater legal certainty but also imposes stricter controls on asset types, product structuring, and market conduct.
Early engagement with the new requirements – particularly around regulated activities, asset classification and platform operations – will be essential to maintaining and expanding virtual asset offerings in the UAE.
Further Information
For further information on the 2026 Virtual Assets Framework or other Banking and Finance matters, please contact the Hadef & Partners Banking Team.
This article is intended for general informational purposes only and does not constitute legal advice. Readers should seek independent legal counsel in relation to their specific circumstances.