Zand Bank is emerging as a key player in the UAE’s digital finance sector, evolving from its foundation as the nation’s first licensed digital bank into a potential all-in-one digital asset services hub. With anticipated approvals for a Virtual Assets Regulatory Authority (VARA) custodial license and a potential stablecoin license from the UAE Central Bank, Zand is actively expanding its role, creating a self-contained ecosystem to serve the growing demand for digital assets in the UAE.
Entry into Digital Custody Services
Zand began its digital asset journey by obtaining a No Objection Certificate (NOC) from the UAE Central Bank, enabling the bank to initiate custodial services quietly. This regulatory approval laid the foundation for Zand to become a crucial banking partner for Virtual Asset Service Providers (VASPs), who value Zand’s stability and regulatory reliability. Today, the majority of VASPs in the UAE rely on Zand for client account management, highlighting the bank’s stronghold in the digital asset market. However, this level of centralization has sparked some industry concerns, as heavy reliance on one institution poses potential risks if issues arise.
From Partner to Competitor with VASPs
With the upcoming VARA custodian license, Zand is preparing to compete directly with VASPs, shifting from a supportive to a competitive role. Additionally, Zand’s application for a stablecoin license signals a broader move to handle digital transactions comprehensively. This could position Zand to issue stablecoins and consolidate end-to-end services, adding competitive pressure on VASPs while offering streamlined solutions to clients seeking integrated services.
Strategic Partnerships and UAE Market Alignment
Zand has also partnered with B2C2 and Ripple, bolstering its liquidity and cross-border payment capabilities. These partnerships allow Zand to bypass some VASP intermediaries, increasing control over transaction processes and reinforcing its position in the digital finance ecosystem.
Conclusion
Zand Bank’s rapid evolution aligns with the UAE’s ambitions to lead in global digital finance. As it continues obtaining licenses and expanding service offerings, Zand is likely to become an integral part of the UAE’s digital asset infrastructure. While this growth promotes market efficiency, the increased centralization introduces challenges for competition and market resilience. Zand’s strategy will likely shape the UAE’s digital asset landscape in the coming years.
