The Central Bank of the UAE's regulations covering Stored Value Facilities will pave the way for the issuance of licences to entities who provide the service in the country, the regulator said in a statement on Sunday.
Stored value facilities are channels through which users can store money digitally and be used to pay for goods and services. Examples of SVFs include e-wallets on mobile phones or other wearable technology, top-up cards and gift cards, among others.
“The CBUAE aims to facilitate FinTech firms and other non-bank payment service providers’ easier access to the UAE market, while continuing to safeguard the customers’ funds, ensure proper business conduct and support the development of payment products and services,” it said.
The central bank first introduced a regulatory framework for stored values and electronic payment systems three years ago. It rolled out new rules governing SVFs in November to boost the country’s digital payments services.
Consumers in the UAE are increasingly opting for digital payments – a trend accelerated by the Covid-19 pandemic.
The new SVF Regulation provides a level playing field to market participants and fosters competition and innovation in stored value and retail payment products and services by removing certain restrictions on licensing, the central bank said.
Changes to the new regulation include allowing non-bank payment service providers to obtain a licence without the need to incorporate a company jointly with a licensed bank and where the licensed bank is the major shareholder; lowering the capital requirement to Dh15 million from Dh50m; and allowing a digital customer on-boarding process instead of physical verification.
However, the regulator said certain publications have falsely claimed that “it has implicitly legalised cryptocurrencies in the UAE”.
The central bank stressed it is not currently accepting or acknowledging crypto-assets or virtual assets as legal tender in the UAE. “The only legal tender in the UAE is the UAE dirham,” it said.
“As defined in the regulation, SVF is a facility that accepts a sum of money or money’s worth [that may, among others, include crypto assets or virtual assets] in exchange for the storage of the value of that money or money’s worth,” the bank said.
Since the regulator is currently not recognising crypto assets as legal tender in the UAE, such assets will not be recognised by the central bank as a means of payment and “can only be used as assets for investment with a potential high risk”, it said.
The regulatory body is currently working on the Retail Payment Services Regulation, which will define rules governing cryptocurrency assets. The regulation will introduce the concept of payment tokens, which are defined as crypto-assets backed by a fiat currency and used for payments.