UAE Makes History: Digital Dirham Completes First Government Transaction

The United Arab Emirates just crossed a major fintech milestone—the first official government transaction using its central bank digital currency (CBDC), the Digital Dirham. This isn't just a pilot test; it's a full-scale deployment signaling the UAE's aggressive push into blockchain-based financial infrastructure.

Why it matters: While private cryptos like Bitcoin grab headlines, sovereign digital currencies are quietly reshaping how nations handle payments, audits, and monetary policy. The UAE's move puts it ahead of 80% of G20 countries still stuck in 'research phase' purgatory.

Bonus jab: Traditional bankers watching from Dubai's gold souks just felt their leather-bound ledgers spontaneously combust.

A milestone for national digital finance

The transaction is more than a technological test; it represents a defining step toward a cashless, fully digital economy. The Digital Dirham allows instant settlements between federal and local entities, reducing costs, improving transparency, and eliminating intermediaries.

Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Prime Minister and Minister of Finance, called the pilot a “pivotal milestone in the history of government financial transformation.” He said it reflects the UAE’s commitment to transparency and efficiency in public finance management.

Today, Ministry of Finance & Dubai Finance marked a pivotal milestone in the history of government financial transformation in the UAE, as we executed the first government transaction using the Digital Dirham issued by the Central Bank of the UAE, representing the future of the… pic.twitter.com/gYRiTC1Euh

The Central Bank said the UAE’s first phase includes cross-border pilots with India and full participation in mBridge, a multi-CBDC network for faster and verified trade settlements.

Building an integrated digital economy

The Central Bank of the UAE (CBUAE) first outlined its CBDC strategy in 2023, partnering with R3 and G42 Cloud to develop a secure and scalable digital currency infrastructure. The Digital Dirham aims to improve payments, boost resilience, and ready the UAE for a tokenized economy.

Sheikh Mansour bin Zayed Al Nahyan, Vice President and Chairman of the CBUAE, described the Digital Dirham as a “strategic pillar” of the nation’s digital economy. The Central Bank plans to expand CBDC use across commerce, banking, and trade.

A wider digital strategy

The move aligns with the UAE’s broader digital asset and transparency agenda. In September, the Ministry of Finance joined the OECD’s Crypto-Asset Reporting Framework (CARF), committing to share crypto tax data globally by 2028. 

The UAE has also emerged as a Bitcoin holder, with roughly 6,333 BTC (worth $740 million) mined domestically through government-backed Citadel Mining. The move underscores the UAE’s focus on building digital assets over speculation, strengthening its pro-crypto stance.

Why it matters

The Digital Dirham’s first live use signals that central bank digital currencies are no longer theoretical. The UAE is turning blockchain-backed payments into real infrastructure, not just for efficiency, but for global competitiveness. 

As the mBridge platform connects regional economies, the UAE’s strategy could offer a model for digitizing money while maintaining national control and financial stability.

Also read: Bybit Becomes First Fully Licensed crypto exchange in UAE