BLOCKCHAIN IN UAE TRADE FINANCE

The UAE has positioned itself as a global leader in fintech innovations and with backing from the government and progressive systems making it an attractive hub for global change. With the introduction of blockchain, a system that can be described as an immutable, secure and automated digital notary, the UAE is using blockchain as one of the strategies to achieve its goal of being among the top ten states in a metaverse economy.

Trade finance is a significant contributor to economic stability. The traditional method of carrying out trade finance that involved paperwork was time consuming and statistically, created a gap of approximately 1.5 trillion dollars between the demand for trade finance and the supply. This significant gap stifles growth and adversely affects the growth of small businesses which can be considered the backbone of an economy. Smart contracts, one of the advancements brought about by blockchain technology, is an innovation that is based on trust and efficiency and significantly cuts down the time taken to complete a deal. They automatically handle some aspects of the contracts when certain conditions are met, for example, releasing payment once confirmation of the arrival of the goods at the port is received. This is among the strategies the UAE is applying in working towards a reputable pioneer in the digital economy.

Admittedly, it can always be a challenge to introduce a new system especially in business. Businesses might prefer to continue tried and trusted systems already in place which would pose a lower risk compared to a new system. To combat this, the UAE started out by introducing pilot programs. In 2018, Standard Chartered and Siemens Financial Services piloted a blockchain-based smart guarantees solution in the UAE whose aim was to digitise and automate Siemens’ guarantee process, replacing paper-intensive workflows with smart contracts to streamline issuance and claims, particularly for government beneficiaries. Furthermore, launched in 2019 as UAE Trade Connect and rebranded in 2024 as haifin, a blockchain-powered platform was developed by Etisalat Digital, First Abu Dhabi Bank, and Avanza Innovations to combat trade finance fraud such as double financing and invoice duplication. By validating transactions in real time and leveraging AI and blockchain, haifin enhances transparency and strengthens bank confidence. Since 2021, haifin has been used to inspect trade transactions worth AED 200 billion, identified millions in potential fraud, and expanded its consortium to 15 financial institutions.

Not only is the UAE making sure that the introduction of blockchain is done in a trustworthy manner, but also ensuring that there are frameworks and regulators in place to ensure its goal is met. At the national level, the Central Bank allows only dirham-backed stablecoins under its 2024 Payment Token Services Regulation and provides a sandbox for financial technology pilots, while the Securities and Commodities Authority supervises investment-related digital assets under its 2022 framework. Dubai has gone further by creating the world’s first specialised regulator for virtual assets, the Virtual Assets Regulatory Authority, which licenses exchanges, custodians, and issuers under detailed rules on custody, marketing, and insolvency.

The financial free zones add another layer of regulation. In Abu Dhabi Global Market, the Financial Services Regulatory Authority recognises digital assets, permits decentralised autonomous organisations through a foundation structure, and even offers blockchain-based dispute resolution. The Dubai International Financial Centre regulates crypto tokens under the Dubai Financial Services Authority, which only accepts authorised tokens, and in 2024 it introduced a Digital Assets Law clarifying property rights, coded contracts, and token transfers. Across the country, companies must still comply with federal anti-money laundering and counter-terrorist financing rules in line with global Financial Action Task Force standards. Together, these overlapping frameworks position the United Arab Emirates as a leading hub for blockchain-based trade finance and digital asset innovation.

To conclude, blockchain is transforming trade finance in the UAE and is helping to cement the country’s status as a global leader in fintech innovation. The process has been supported by a comprehensive regulatory framework that balances innovation with legal certainty. Stablecoin restrictions, virtual asset licensing, regulatory sandboxes, and consumer protection measures ensure technology advances without compromising financial integrity. Pilot projects, from Siemens and Standard Chartered’s smart guarantees to the haifin platform, demonstrate tangible benefits such as reduced inefficiencies and stronger fraud prevention. The coordinated efforts of federal authorities, financial free zones, and specialised regulators like the Virtual Assets Regulatory Authority create a coherent governance structure. Together, these measures position the UAE as a regional leader and emerging global benchmark for secure, efficient, and legally robust digital trade.

REFERENCES
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e& Enterprise Rebrands UAE Trade Connect to “Haifin”, Global Technology Group, (https://www.eand.com/en/news/5-March-eand-enterprise-rebrands-uae-trade-connect-to--haifin.html)
First Abu Dhabi Bank, Etisalat Launch UAE Trade Finance Blockchain, Ledger Insights, (https://www.ledgerinsights.com/first-abu-dhabi-bank-etisalat-launch-uae-trade-finance-blockchain/)
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