The UAE gears up for another big crypto push with a plan to launch a new stablecoin, backed by three entities: First Abu Dhabi Bank, the largest bank in the UAE; ADQ, one of the main sovereign wealth funds in Abu Dhabi; and International Holding Co., the largest listed company in the UAE by market capitalisation.
A stablecoin is essentially a cryptocurrency, the value of which is pegged to another currency or financial instrument, in this case, the UAE Dirham. Due to this peg, the stablecoin becomes a viable medium of exchange due to the less volatile nature of fiat currencies, rather than acting as other volatile cryptocurrencies. A popular stablecoin, Tether (USDT), backed by US dollar reserves, is currently the third largest cryptocurrency, having a market cap of $148 billion, indicating the wide use of its nature.
Statements released by the giants backing the new stablecoin suggest it will change the dynamics of making payments and significantly enhance the ease of doing business. The coin, fully regulated by the Central Bank of the UAE, would be used as a reliable digital currency by consumers, businesses and institutions, both locally and globally. It will also support innovative digital applications like machine-to-machine transactions and AI. This currency is expected to have a significant impact on finance, commerce, trade, and other sectors in the UAE, establishing a reliable blockchain payment system in the country.
The launch of this stablecoin follows the Digital Dirham strategy, implemented in March 2023, along with regulations on stablecoins from last year. The ADGM and Dubai’s Virtual Assets Regulatory Authority already have frameworks for cryptocurrencies in place. The approval of AE Coin, UAE’s first digital currency and the launch of the new digital-oriented UAE Dirham symbol clearly show the path of the UAE’s government regarding the adoption of digital assets. The strategy aims to strengthen the UAE’s digital infrastructure ecosystem and is in line with the country’s vision of establishing itself as a global hub for innovation and technology.
UAE prepares for major crypto leap: Century Financial
