Tether to Launch UAE Dirham-Pegged Stablecoin

Tether has announced plans to develop a stablecoin pegged to the United Arab Emirates Dirham (AED).

Tether to Develop UAE Dirham-Pegged Stablecoin

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— Tether (@Tether_to) August 21, 2024

The launch of the asset is planned in partnership with the local technology conglomerate Phoenix Group, supported by Green Acorn Investments.

According to the statement, the product will complement the issuer’s range of “stablecoins,” which includes the flagship USDT based on the US dollar, as well as EURT (euro), CNHT (Chinese yuan), MXNT (Mexican peso), XAUT, and aUSDT (both gold-backed).

The upcoming stablecoin will serve as a “digital representation of the dirham,” fully backed by liquid reserves.

“This digital asset will optimize international trade and money transfers, reduce transaction fees, and provide hedging against currency exchange rate volatility, thus playing an important role in the financial ecosystem of the UAE and beyond,” the press release stated.

The global stablecoin market capitalization stands at $150 billion, with over $115 billion attributed to USDT. Tether forecasts the segment’s volume to reach $2.8 trillion by 2028.

“Cryptocurrency usage in the UAE has experienced exponential growth since 2022, driven by the establishment of VARA — the world’s first independent crypto regulator. The favorable regulatory environment in cities like Dubai and Abu Dhabi has transformed them into global hubs for digital asset and blockchain technology innovation,” the company emphasized.

Abu Dhabi Proposes Rules for Fiat-Based Tokens

The financial regulator of the Abu Dhabi Global Market (ADGM) has opened a public consultation on a draft regulatory framework for “fiat-referenced tokens” (FRT) such as stablecoins.

According to the FSRA proposal, the market capitalization of such assets should equal the value of reserves at the end of each business day.

Coin issuers will maintain separate collateral pools for FRTs based on different currencies. The requirements stipulate a fixed fiat price for the tokens. Asset holders will have the opportunity to redeem FRTs for this amount.

The authority will conclude the comment period on October 3, 2024, after which ADGM and FSRA will adopt the regulatory framework in its final form.

According to the regulator’s description, FRT is a digital asset whose transfer and storage are conducted electronically using distributed ledger technology.

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 international expansion.