The new digital currency will be backed by the dirham
The new digital currency, regulated by the UAE Central Bank, will operate on the ADI blockchain
Abu Dhabi entities IHC, ADQ and First Abu Dhabi Bank plan to launch a dirham-backed stablecoin, which will be fully regulated by the UAE Central Bank, aimed at easing payment solutions.
The stablecoin will operate on the ADI blockchain and will be issued by FAB, the UAE’s largest bank, subject to regulatory approval, a joint statement on Monday said.
It will be used as a “reliable digital currency” by consumers, businesses and institutions and also support emerging digital use cases such as machine-to-machine and artificial intelligence, they said.
“The launch of the stablecoin marks a pivotal step in our commitment to strengthening the UAE’s digital infrastructure ecosystem,” Mohamed Alsuwaidi, managing director and group chief executive of Abu Dhabi wealth fund ADQ, said.
“As we move forward towards an increasingly digital and connected economy, the stablecoin will provide a solution that is secure, efficient and scalable, while creating new opportunities for growth and value creation.”
Stablecoins − which are pegged to a fiat currency − tend to be less volatile when compared to cryptocurrencies, such as Bitcoin. They are grounded, being tied to a currency, or liquid reserves, including government treasuries, or commodities such as precious metals.
The UAE Central Bank began implementing its digital currency strategy, Digital Dirham, in March 2023. Its regulation on stablecoins last year indicated that it was to establish a clear operational framework for cryptocurrencies when implemented.
Abu Dhabi Global Market and Dubai’s Virtual Assets Regulatory Authority already have frameworks in place for cryptocurrencies. To bolster the strategy, the central bank last month unveiled a new, digital-orientated dirham symbol.
AE Coin, the first regulated digital currency in the UAE, was granted final approval by local authorities in December and was scheduled to be launched “soon”.
Tether, whose USDT is the world’s biggest stablecoin, last August also received the go-ahead to develop a stablecoin in the UAE.
The new stablecoin launched by IHC, ADQ and FAB is expected to “have a significant impact on various industries, including finance, commerce, and trade”, the companies said.
The ADI blockchain, on which it will operate, has been developed in the UAE by the ADI Foundation, which will provide a compliant distribution network for blockchain payments. ADI Foundation has strategic partnerships with governments in over 20 countries.
“This new stablecoin represents a transformative step forward and will revolutionise the way both consumers and businesses engage with trusted blockchain payments in the UAE,” said Hana Al Rostamani, group chief executive of FAB.
