Risk disclosure: virtual assets, custody and stablecoins

Summary in plain language

• The price of a virtual asset can fall sharply and can fall to zero.
• Custody keeps assets and keys under control. It does not protect their market value.
• A transfer on a public blockchain cannot be reversed. An asset sent to a wrong address or network may be lost for good.
• Zand AED is issued by Zand Trust, not by Zand Bank PJSC. Its value depends on the issuer's reserves and on access to redemption.
• Virtual assets do not benefit from any form of financial protection.
• Rules can change, and a change can restrict or end a service.

Market and volatility risk

Virtual assets trade around the clock on markets that can move far in minutes. Buyers can disappear, so a holding may be hard to sell at any price. An asset held in custody can fall to zero. Zand Bank stores assets for its custody clients. It does not manage, hedge or advise on them. Past prices are no guide to future prices.

Custody and operational risk

Zand Bank describes its custody controls as a dedicated wallet for each client, key storage in hardware security modules, approval by multi-signature and threshold signature schemes and four-eye checks on every transaction authorisation. The bank states that bankruptcy remoteness rests on UAE federal law on assets held in custody for a third party, on VARA's Custody Services Rulebook and on its Custody Service Terms & Conditions.

These controls lower the chance of theft, of misuse of keys and of client assets being mixed with the bank's own. They do not remove every risk. Networks and third-party technology can fail or be attacked. Staff and clients can make mistakes. An outage can delay an instruction. A legal position that no court has tested can turn out differently. Insurer, scope and terms of any insurance cover: to be confirmed

Read the digital asset custody service description, the security controls and their limits and the fees that apply.

Stablecoin and payment token risk

Zand AED (AEDZ) is a payment token pegged 1:1 to the UAE dirham. Zand Trust, a wholly owned subsidiary of Zand Bank PJSC, issues it. The bank is not the issuer. Under the Payment Token Services Regulation of the Central Bank of the UAE, holders of a payment token receive no interest and no other benefit linked to how long they hold it.

Issuer and reserve risk

The token is a claim on its issuer. The release of 17 November 2025 states that Zand AED is fully backed one-to-one by AED reserves held in segregated and regulated accounts, and the Zand Trust transparency page lists monthly reserve reports. A holder still depends on the issuer, on the institutions that hold the reserves and on the accuracy of those reports.

Redemption access

Zand Trust states that AEDZ is redeemable 1:1 for dirhams. Redemption is a service for clients that Zand Trust has onboarded, and a redemption order carries fees, including the blockchain network fee. A holder who is not an onboarded client has to sell the token to another party at the price that party offers.

Loss of peg

On a trading venue the price of a stablecoin can move away from 1 dirham, for example when many holders sell at once, when a venue or a network has problems or when confidence in an issuer falls. Buying above the peg or selling below it is a loss, even if the issuer redeems at 1:1.

See the Zand AED reserves and redemption terms and the explainer on how AED stablecoins work.

Network and smart-contract risk

A transfer on a public blockchain is final once the network confirms it. Nobody can recall it, including Zand Bank. Sending an asset to a wrong address, or over a network that the receiving wallet does not support, can lose it permanently. Zand AED is a multi-chain token that runs on smart contracts. A smart contract can contain a defect even after an independent audit. A network can become congested, halt or split into competing versions (a fork), which can delay transfers, raise fees or create assets that a custodian does not support.

Legal and regulatory risk

The rules for virtual assets and payment tokens in the UAE are recent and can change. A change in law, in a regulator's rulebook or in a licence condition can restrict a service, raise its cost or end it. VARA licence no. VL/2024/12/001 covers Custody Services only and permits Zand Bank PJSC to serve Institutional Investors and Qualified Investors only. Tax and accounting treatment differs between countries. The licences page sets out what each licence covers, and there is an explainer on UAE regulators.

No financial protection

Zand Bank publishes a separate Risk Disclosure Statement (PDF) for its custody service. Custody clients should read it.

Not advice

This page is general information. It is not investment, legal or tax advice, and it does not list every risk. Take independent professional advice before you use a digital asset service. For questions, contact the digital assets team. If something has gone wrong, use the complaints route. The website terms of use apply, and the Insights hub has longer guides.