UAE Central Bank Grants Preliminary Approval for Dirham-Based Stablecoin

CBUAE has granted AED Stablecoin preliminary approval to issue a dirham-based stablecoin, AE Coin, in accordance with the Payment Token Services Regulation. This was reported by Gulf Today.

The firm has emerged as the frontrunner in the race to become the first issuer of a regulated stablecoin pegged to the local currency.

If fully approved, AE Coin could potentially serve as a settlement unit in pairs with cryptocurrencies on CEX and DEX, as well as a payment medium among merchants.

According to the proposal by the FSRA, the market capitalization of stablecoins must equal the value of reserves at the end of each business day.

Issuers are required to maintain separate collateral pools for stablecoins based on different currencies. The guidelines stipulate a fixed fiat price for the tokens, allowing asset holders to redeem the coin for this amount.

In August, Tether announced plans to develop a stablecoin pegged to the dirham, with support for the launch provided by Phoenix Group and Green Acorn Investments.

Earlier in 2023, Binance described the UAE as a “key point” for the bitcoin exchange’s business.

Coinbase considered using the jurisdiction as a strategic hub for overseas expansion.