Regulating Cryptocurrencies in the United Arab Emirates: Legal Frameworks, Enforcement Gaps, and Anti-Money Laundering Challenges

Abstract

The regulatory architecture governing cryptocurrencies and virtual assets in the United Arab Emirates has expanded markedly through Federal Decree-Law No. 20 of 2018, Cabinet Decision No. 10 of 2019, Federal Decree-Law No. 46 of 2021, and Dubai Law No. 4 of 2022, reflecting the state’s ambition to position itself as a leading digital finance hub while addressing money laundering risks. Notwithstanding this legislative progress, significant challenges persist, stemming from the decentralized and pseudonymous nature of cryptocurrencies, fragmented institutional oversight across federal and emirate-level authorities, and constrained supervisory capacity for real-time monitoring. Existing scholarship has largely overlooked the interaction between legal design and institutional enforcement dynamics within the UAE’s cryptocurrency regime, creating a critical gap this study addresses. The study critically evaluates the legal and institutional frameworks governing cryptocurrencies, examines enforcement and compliance vulnerabilities within AML mechanisms, and assesses regulatory risks associated with cryptocurrency market adoption. Employing an exploratory qualitative doctrinal methodology, the analysis systematically examines primary legislation alongside secondary sources drawn from high-impact journals, authoritative monographs, and institutional reports, subjected to rigorous thematic analysis. Guided by Institutional Theory, the findings demonstrate that while the UAE’s framework is normatively comprehensive, enforcement effectiveness is undermined by coordination deficits and technological constraints. The study advances targeted recommendations to enhance regulatory coherence, institutional integration, and risk-based supervision, contributing to legal, financial regulation, international governance, and digital risk studies, while identifying directions for future comparative inquiry.