Fintech, in general terms, means the usage of technology for the provision of financial services. In recent years, UAE has seen a vast and rapid growth in the companies and institutions that are working towards developing and using technology, products, services etc. for the purposes of providing financial services in and outside of UAE. Considering the financial nature of the services that are envisaged to be provided by such entities, such services are regulated by the competent authorities in the respective jurisdiction in the UAE. Further, generally, financial activities attract the implications of relevant financial services regulation(s) in the UAE, which are discussed herein below.

This article provides a general overview of the applicable laws and regulations governing the operations and licensing requirements to be complied by such institutions, with a focus on the set of regulations that are currently in place in UAE mainland, Dubai International Financial Centre (“DIFC”) and Abu Dhabi Global Market (“ADGM”).

  1. UAE Mainland

Fintech Pilot Licenses

In 2018, the Securities and Commodities Authority (“SCA”) issued Decision of the Chairman of the SCA Board of Directors No. (28 / Chairman) of 2018 Approving the Fintech Regulatory Framework (Fintech Regulatory Sandbox Guidelines) (“Decision”) which approved the Fintech regulatory framework/regulations governing the testing environment for innovative products, services, solutions and business model. The decision introduced the concept of “Fintech Pilot licenses” which allow the companies to work in an experimental and controlled environment (defined as a pilot financial technology laboratory) to test, innovative products, services programs and business models within a limited and restricted scope and timeframe.

Generally, the idea is to let the participants enter the “sandbox” and test their products in a relaxed regulatory environment. SCA will work with applicants on a case by case basis to evaluate products, services, programs, or business models and determine the legal and regulatory requirements that could be relaxed for the applicant or the ones from which the applicants be exempted from.

Relevant Regulation(s) And Licensing Requirements

Regulatory Framework for Stored Values and Electronic Payment Systems

Currently, the Regulatory Framework for Stored Values and Electronic Payment Systems (“Regulation”) issued in 2017, is the governing regulation for the payment service providers in the UAE. The Regulation mandates the application, approval and receipt of the relevant licenses before an entity deals with payment systems. There are two (2) types of payment service providers that must obtain the requisite licenses under the Regulation, namely the Payment Service Providers (“PSP”) and the Payment System Operator (“PSO”). The relevant licensing requirements to be complied with by the respective entity would depend on the category the said entity falls into.

Briefly, a PSO is an entity which operates a fund transfer system or any other system that facilitates the circulation of the digital money in the UAE, whereas a PSP is an entity/ institution licensed or authorized to provide digital payment services in the UAE. Under the Regulation, there are four (4) types of PSPs, namely:

  1. Retail PSP: Authorized commercial banks and other licensed PSPs offering retail, Government, and peer-to-peer digital payment services as well as money remittances
  2. Micropayments PSP: PSPs offering micropayments solution facilitating digital payments targeting the unbanked and under-banked segments in the UAE
  3. Government PSP: Federal and local Government statutory bodies offering Government digital payment services
  4. Non-issuing PSP: Non-deposit taking and non-issuing institutions that offer retail, Government, and peer-to-peer digital payment services.

To effectively figure out the category that an entity falls into, one must look at the relevant criteria that must be satisfied by said entity to qualify as one of the PSPs enlisted herein above. Whilst the exact requirements to be complied by an entity to obtain a license are currently unclear (as the licensing manual mentioned in the Regulation is yet to be published by the Central Bank), that the applicants may write to the Central Bank seeking its approval for a PSP license by submitting a brief business plan.

The Regulation for Issuing and Offering Crypto Assets

In October 2019, SCA posted the draft regulation concerning the issuance and offering of the crypto assets in the UAE (“Crypto Asset Regulation”) and invited the relevant parties including investors, brokers, financial analysts, researchers, media personnel etc. to provide their inputs and feedback on the draft.

According to the SCA, Crypto Asset Regulation is envisaged to encompass all aspects of Crypto Assets industry in the UAE. According to SCA, once these regulations are implemented, the market participants will also be allowed to request guidance on specific token issuance and regulatory requirements from the SCA.

  1. Free Zones (Abu Dhabi Global Market (“ADGM”) and Dubai International Financial Centre (“DIFC”))

The Financial Services and Markets Regulations 2015 and any amendments thereto (“FSMR”) is the regulation currently governing the financial services regulated in the ADGM, with the guidance on the same contained in the FSMR Handbook. The regulatory body regulating the financial services and market in ADGM is the Financial Services Regulatory Authority (“FSRA”).

The financial activities in the DIFC are regulated by the Dubai Financial Services Authority (“DFSA”). DFSA is an independent regulator of financial and related services conducted in or from the DIFC. Financial services are generally governed by Dubai Law No. 1 of 2004 and any amendments thereto (“DIFC Regulatory Law”), with guidance on the same in the DFSA Handbook.

Regulatory Lab (ADGM) and the Innovative Testing License (DIFC)

ADGM and DIFC introduced similar concepts that allow the Fintech companies to develop and test their products in a controlled environment without immediately being subject to all the regulatory requirements that would otherwise be applicable on them. In this regard, ADGM introduced the concept of the Regulatory Laboratory (“RegLab”), whereas in DIFC, a similar concept of the Fintech Hive accelerator programme and the Innovation Testing License (“ITL”) was introduced.

Generally, FSRA’s RegLab framework applies to two categories of FinTech Participants namely, those who have a FinTech product that is untested in the UAE market but wish to live‐test it in the controlled environment of ADGM without attracting the full suite of regulatory requirements; and those who may already be offering their FinTech product in the market, but wish to continue researching and developing it within the confines of the RegLab.

Similarly in DIFC, the Fintech Hive accelerator programme consists of a curriculum in which a group of selected finalists work closely with financial institutions to test and develop their solutions. In this regard, FinTech firms can apply for an ITL which is a restricted class of financial services license that will enable the Fintech firms to test new products, services and business models whilst only complying with rules appropriate for testing and without being subject to all the regulatory requirements that would otherwise be applicable to it.

In both cases, it is imperative to consider the stage of the development of the product or service. In both cases, the Fintech proposal must not be at a conceptual stage and a product must be at a stage where it is ready to be tested in the market. A mere concept or idea will not suffice. By contrast, it must also be noted that both RegLab and ITL are also not intended as launching pads for the relevant Fintech firms. Therefore, in the event a Fintech proposal is fully operational and both FSRA and DFSA consider the same to be in compliance with all the relevant regulatory requirements, then in such event the product would be directly launched under the relevant regulations.

Some Other Relevant Regulations and Guidance Concerning Financial Activities in ADGM

FSRM has also issued various other regulations and guidance in relation to the financial activities in the ADGM. A few examples are provided herein below.

  1. On 25 June 2018, FSMR was amended to include the operation and regulation of the Crypto Asset Business in or from the ADGM market.
  2. On 10 September 2018, FSMR was amended to include the provisions concerning the operation of a Private Financing Platform from ADGM, which pertains to the usage of an electronic platform to facilitate the provision of financing which can be in the form of debt, equity or otherwise.
  3. ADGM issued the guidance on regulating the Digital Securities Activity in the ADGM.
  4. ADGM issued the supplementary guidance on the authorization of digital investment management (“Robo-Advisory”) activities in the ADGM, which pertains to the provision of investment management services using algorithm-based tools between clients and the provider of digital investment management services.


Based on the above discussion, it can be seen that, considering the rapid growth in the companies and institutions that are working towards developing and using technology, products, services etc. for the purposes of providing financial services, the relevant authorities are constantly working towards ensuring that a well-regulated environment is in place for these institutions.

Mahmood Hussain Advocates & Legal Consultancy regularly advises institutions on the relevant legal and regulatory framework for their businesses, and is well equipped with the knowledge and expertise required to assist its clients in the field.


MHLF (Mahmood Hussain Law Firm) and Mora & Associati are proud of this alliance since it will allow both law firms to offer our clients a seamless assistance for their international operations in the Emirates and Italy. We intend to offer an added value in the commercial relationship between Italian and Emirati Companies.