Author: Liang Yu
Editor: Zhao Yidan
On January 7, 2026, a significant announcement came from the banking sector in the UAE: RAKBank, located in Ras Al Khaimah, officially announced that it has received in-principle approval from the Central Bank of the UAE to issue a payment token pegged 1:1 to the UAE Dirham, namely the Dirham stablecoin.
According to the disclosed plan, this upcoming stablecoin will be fully and transparently backed by an equivalent amount of legal Dirhams held in a segregated regulatory account by the bank. It is not a technical gamble but a product strictly adhering to the current regulatory framework—issued and managed through pre-audited smart contracts, with a commitment to provide verifiable real-time reserve proof, embedding "compliance" and "transparency" into its design DNA.
For this traditional bank, which has allowed retail customers to trade cryptocurrencies, this move is far from a simple product expansion. It marks a critical elevation in its digital asset strategy: transitioning from being a "service provider" that offers trading channels to becoming a "issuer" that directly mints regulated, on-chain native currency claims.
This is not just an evolution of a bank's business; it is another key piece in the UAE's carefully constructed national digital financial ecosystem. Under the top-level design of central bank digital currency (digital Dirham), licensed commercial banks represented by RAKBank are being allowed to enter the arena, weaving together a network for future payments and asset digitization. Thus, a silent competition regarding "who is qualified to issue core assets on-chain" has added a heavyweight player holding traditional credit "tickets."
1. The Four Pillars of RAKBank's Stablecoin
The Dirham stablecoin approved for RAKBank showcases a relatively complete and reference-worthy issuance model under the current regulatory framework. This plan is built around four core elements, each addressing key requirements for asset tokenization.
The licensed bank as the issuer is the trust foundation of the entire scheme. As a licensed commercial bank in the UAE, RAKBank's long-established credit system provides a potential solution to the most critical "source of trust" issue in asset tokenization. This stands in stark contrast to many stablecoins issued by tech companies, where the participation of traditional financial institutions brings a different model of credit endorsement to this emerging field.
Full reserves and account segregation ensure the authenticity and security of the underlying assets. According to the plan design, each circulating stablecoin will have an equivalent Dirham stored in a segregated regulatory account. This 1:1 peg and asset segregation arrangement aim to eliminate market doubts about reserve adequacy and provide investors with clear repayment expectations.
Smart contracts and transparent audits form the technical execution layer. The management of token issuance and circulation through audited smart contracts, along with a commitment to provide real-time reserve proof, not only enhances operational efficiency but also creates a new transparency mechanism, allowing market participants to directly verify asset backing.
A clear regulatory framework delineates compliance boundaries. The entire issuance activity will be conducted under the UAE's "Payment Token Services Regulations," which require 100% reserve backing, segregated account storage, and explicitly prohibit algorithmic stablecoins and privacy tokens. This "regulatory-first" approach differs from the "innovate first, regulate later" model prevalent in traditional fintech.
2. The Digital Currency Landscape in the UAE: How Are Various Forces Positioned?
RAKBank is not the only player in this field; it enters a market that already has multiple competitors. Understanding this competitive landscape helps us see the overall picture of the UAE's digital financial ecosystem.
The coexistence of diversified issuers is a notable feature of the current market. In November 2025, Zand Bank launched the UAE's first regulated, public blockchain-based multi-chain Dirham stablecoin. AE Coin, issued by Al Maryah Community Bank, was approved even earlier and has been used in pilot projects for cryptocurrency payments in government services. Meanwhile, the largest bank in the UAE, First Abu Dhabi Bank, has also announced plans to launch its own Dirham stablecoin. The participation of these institutions from different backgrounds reflects a general optimism in the market regarding this field.
The entry of international participants enriches the competitive dimension. Internationally renowned blockchain companies like Circle and Ripple have also obtained relevant licenses to issue stablecoins in the UAE, indicating that the UAE's digital currency ecosystem is open not only to local institutions but also to international innovators. This open attitude may be related to the UAE's ambition to become a global digital financial hub.
The gradual formation of a layered structure may be a future development trend. Although the current situation presents a "coexistence of multiple issuers," as the market matures, it is likely to evolve into different tiers: quasi-public stablecoins aimed at government payments and cross-border settlements; settlement-type stablecoins issued by major banks serving institutional clients; and application tokens targeting specific industries or scenarios. Products at different levels will differ in functionality, regulatory requirements, and target users.
The central bank's overall planning provides a top-level design background. The "Financial Infrastructure Transformation Plan" launched by the Central Bank of the UAE aims to establish the UAE as a global financial center through a series of digital initiatives. Under this plan, the issuance of compliant stablecoins by the private sector can be seen as a strategic step in building a complete digital financial ecosystem, nurturing markets and application scenarios for the potential future launch of central bank digital currency.
3. From Supporting Role to Core: The Quiet Transition of Banks' Roles
RAKBank's stablecoin plan is not just about launching a new product; it represents an exploratory shift in the positioning of commercial banks in the digital asset space. This shift may impact the structure of the future financial system.
The limitations of traditional roles prompt banks to seek new positioning. In the past, commercial banks often played a supporting role in the digital asset space, such as providing account services for exchanges or allowing customers to trade cryptocurrencies, essentially acting as a "bridge" between traditional finance and the digital world. While this role is important, it has not fully leveraged banks' core capabilities in credit creation and risk management.
The attempt to take on the role of issuer opens up new possibilities. By issuing their own backed on-chain stablecoins, banks are no longer just "bridges" but are trying to become "creators" of on-chain native assets. This essentially involves standardizing and programmably encapsulating the bank's most basic liabilities—deposit claims. If this model proves feasible, the functional positioning of commercial banks in the digital asset ecosystem will be expanded.
A cautious assessment of scalability is a necessary rational attitude. It is important to clarify that the successful tokenization of currency claims does not naturally imply the smooth replication of other types of real-world assets (RWAs). Currency stablecoins have the advantage of having a single legal attribute and clear value anchoring, while assets like bonds and fund shares involve more complex issues of yield distribution, credit risk, and bankruptcy hierarchy. Therefore, the more accurate significance of the RAKBank model may be to explore feasible operational paradigms for the most basic asset categories within RWAs, rather than paving the way for all RWAs.
The dual impact of competitive dynamics is worth noting. The entry of commercial banks as stablecoin issuers into the RWA space may promote the compliance and mainstreaming of the entire ecosystem, but it may also exert some pressure on existing third-party RWA issuance platforms. This coexistence of competition and cooperation will influence the future development path and innovation direction in the RWA field.
4. Three Diverging Paths: Different Logics of Global Exploration
RAKBank's attempt is not an isolated phenomenon; different financial systems around the world are exploring possible paths for commercial banks to participate in digital asset issuance. Comparing these paths' similarities and differences helps us understand the full scope of this trend.
Different practices under similar concepts showcase path diversity. Just before and after the announcement from RAKBank, JPMorgan announced that its deposit token, named JPM Coin, would be deployed on the Canton Network supported by institutions like Goldman Sachs and BNP Paribas. Unlike RAKBank's plan aimed at a broader range of scenarios, JPM Coin primarily serves institutional clients for instant settlements and cross-border transactions. This difference reflects the strategic choices made by different banks based on their customer bases and business focuses.
Differences in regulatory philosophy shape different institutional environments. Unlike the UAE, which allows commercial banks to issue stablecoins on public or semi-public chains, markets like the US and Hong Kong emphasize closed networks, institution-specific scenarios, and risk isolation. This reflects different regulatory agencies' attitudes toward the fundamental question of "what degree of public composability should programmable money possess," and it determines the role boundaries that commercial banks can explore in different markets.
The evolution of capital regulatory frameworks provides compliance references. The Hong Kong Monetary Authority announced that starting in January 2026, it will implement Basel Committee regulatory standards for banks' crypto asset risk exposures, categorizing qualified, adequately backed stablecoins as "Group 1b crypto assets," allowing them to apply risk capital weights similar to traditional assets. Such clear regulatory frameworks provide a rule basis for commercial banks to explore asset tokenization under compliance.
The choice of technical paths affects the speed of development. Different countries and regions' choices regarding blockchain infrastructure, interoperability standards, and privacy protection technologies also influence the technical paths and advancement speeds of commercial banks participating in digital asset issuance. These technical decisions, along with regulatory policies and market demands, collectively shape the characteristics of digital financial ecosystems in various regions.
5. The Last Barrier Before Scaling
RAKBank's stablecoin plan can be seen as an important case for observing the development of the RWA field. As the industry gradually shifts from exploring technical feasibility to attempting large-scale applications, a series of practical challenges are becoming increasingly apparent.
The need for infrastructure improvement is a prerequisite for scaling. Industry analysis generally believes that asset tokenization will gradually transition from experimentation to application attempts. In this process, the standardized operational processes established by licensed issuers like RAKBank, including KYC/AML, reserve audits, and compliance redemption, will become important infrastructure elements for bringing traditional assets into the on-chain world.
Interoperability challenges urgently need solutions. How to achieve cross-chain and cross-platform interoperability and liquidity aggregation for various asset tokens issued by different banks and countries is a dual challenge of technology and business. The cross-chain interoperability framework being developed by JPMorgan and Singapore's DBS Bank is an active exploration aimed at addressing this issue. The degree of interoperability achieved will directly impact the application scope and efficiency improvements of asset tokenization.
The gradual process of legal confirmation requires practical accumulation. The legal status recognition of on-chain digital certificates and the judicial handling processes in case of disputes still need more practical cases to gradually clarify. While smart contracts can automatically execute terms, their integration with various countries' commercial laws and bankruptcy laws will still require time and practice to align. This legal confirmation process may be gradual rather than instantaneous.
The real test of market acceptance determines ultimate success or failure. Whether for enterprises or individual users, large-scale adoption will only truly occur when using these digital tokens offers better cost, speed, or functional experiences than existing tools. Market acceptance depends not only on technical characteristics but also on user experience, network effects, and conversion costs.
Three key variables will influence the development process. The substantive progress of this transformation attempt will depend on the continued consistency of regulatory standards, the practical realization of cross-system interoperability, and whether economic entities are willing to pay migration costs for "programmability." The interplay of these three variables will collectively determine the extent to which the vision of commercial banks as "issuance hubs" for RWAs can be realized.
When RAKBank's Dirham stablecoin begins circulating on-chain, it represents not only the launch of a new financial product but also an experiment in the integration of the traditional financial system with the digital financial ecosystem. The outcome of this experiment will not only affect the financial layout of a single bank or country but may also provide a reference for the digital transformation of the global financial system.
Whether commercial banks can successfully transform into "issuance hubs" for RWAs depends on technological innovation and business strategies, as well as regulatory evolution and market choices. In this interplay of multiple factors, maintaining flexibility in experimentation and prudent risk management may be more important than rushing to conclusions. The evolution of the financial system has always been a gradual process, and the transformations of the digital age are no exception.
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