UAE Dirham-Pegged Stablecoin to Transform Digital Transactions

Tether, the company behind the widely-used USDT stablecoin, has unveiled plans to introduce a new stablecoin pegged to the United Arab Emirates Dirham (AED). This initiative, in collaboration with Phoenix Group and Green Acorn Investments, seeks to capitalize on the UAE's evolving regulations on digital assets, simplifying both local and international transactions.

The new Dirham-pegged stablecoin will be fully supported by liquid reserves held within the UAE, ensuring that each token accurately reflects the AED's value. This backing provides users with a stable and reliable means of engaging with the UAE's currency, enhanced by the transparency and efficiency of blockchain technology.

Tether's partnership with Phoenix Group and Green Acorn Investments underscores the significance of this project. The combined expertise of these companies is expected to streamline international trade and remittances, lowering transaction fees and offering protection against currency fluctuations. This stablecoin is anticipated to become a vital component of the UAE's financial ecosystem.

Tether CEO Paolo Ardoino expressed his enthusiasm for the project, highlighting the UAE's rising status as a global economic hub. He believes the Dirham-pegged stablecoin will offer a versatile solution for users, catering to needs such as cross-border payments, trading, and digital asset diversification.

This development is closely aligned with the UAE Central Bank's (CBUAE) new Payment Token Services Regulation (PTRS), which regulates stablecoin-related activities within the country. The PTRS mandates that businesses in the UAE can only accept crypto payments for goods and services using a Dirham-backed payment token. Additionally, foreign issuers must register with the CBUAE and maintain 100% of their reserves in cash, ensuring the stablecoin's full backing.

The PTRS regulations are set to be fully implemented by June 2025, with a transitional period allowing businesses to adapt. These regulations do not apply to financial free zones like the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM), but entities licensed by the Virtual Asset Regulatory Authority (VARA) will still need to comply.

Seyed Mohammad Alizadehfard, CEO of Phoenix Group, is optimistic about the stablecoin's potential to revolutionize the UAE's digital economy. He commended Abu Dhabi's progressive stance on blockchain and digital assets, making it an ideal launchpad for this innovative financial product.

In summary, Tether's Dirham-pegged stablecoin is poised to play a crucial role in the UAE's digital economy. By offering a secure and stable method of transacting in AED, it will serve as a valuable resource for businesses and individuals, furthering the UAE's goal of becoming a leader in the global digital finance arena.