UAB Magazine Issue October 2026

87 Study Union of Arab Banks - October - 2026 Digital Assets, Stablecoins, and Artificial Intelligence in Banking: Emerging U.S. Regulatory Expectations and Compliance Challenges for Arab Banks Introduction: Banking is changing, and so are the rules Digital assets, stablecoins, and artificial intelligence (AI) are changing the way financial services are delivered. Payments can be made more quickly, financial transactions can be processed around the clock, and AI systems can help banks detect suspicious activity, assess credit risk, and serve customers more efficiently. For banks, these developments offer opportunities to improve services, reduce costs, and strengthen their position in international markets. However, innovation also brings new risks. Digital assets can create challenges in identifying customers and tracing transactions. Stablecoins can introduce new questions about redemption, reserves, and the movement of funds across borders. AI systems may improve decision-making, but they can also produce inaccurate results, expose sensitive information, or make decisions that are difficult to explain. The United States is developing its regulatory approach to these developments, with particular attention to financial stability, consumer protection, cybersecurity, and the prevention of money laundering and sanctions evasion. These changes matter to all banks, even when they do not operate directly in the U.S. market. Their international partners, dollar transactions, technology providers, and customers may connect them to the evolving U.S. regulatory environment. The challenge is to embrace innovation without weakening the controls that protect banks, customers, and international financial relationships.