Tether to Develop UAE Dirham-Pegged Stablecoin

On August 21, 2024, Tether revealed its plans to introduce a new stablecoin that will be pegged to the United Arab Emirates Dirham (AED).

Stablecoin issuer Tether has announced plans to introduce a new stablecoin pegged to the United Arab Emirates Dirham (AED). This Dirham-pegged token will join Tether’s lineup of stablecoins, which includes USDT, EURT, CNHT, MXNT, XAUT, and aUSDT. The launch is being undertaken in partnership with Phoenix Group PLC, a multi-billion-dollar tech conglomerate based in the UAE, and is supported by Green Acorn Investments Ltd. Additionally, this new digital currency will aim to secure licensing under the UAE Central Bank’s recent Payment Token Services Regulation.

The Dirham-pegged stablecoin will be fully backed by liquid reserves located within the UAE and will serve as a digital reflection of the UAE’s Dirham. Like other Tether products, this stablecoin will adhere to stringent reserve standards, guaranteeing that each Dirham-pegged token maintains parity with the AED. This structure is designed to offer a high level of stability, transparency, and confidence to users who seek the benefits of transacting in AED through digital means.

Users of this forthcoming stablecoin will enjoy an efficient and low-cost method of accessing the advantages of the Dirham, while utilizing the transparency and speed that blockchain technology provides. This new digital asset is expected to streamline international trade and remittances, reduce fees associated with transactions, and offer a hedge against fluctuating currencies. In doing so, it is poised to play a critical role in the financial infrastructure of the UAE, benefiting both local and international users.

Paolo Ardoino, Tether’s CEO, expressed excitement about the launch, saying,

“We are pleased to announce this initiative to develop Tether’s Dirham-pegged stablecoin, which will complement our existing stablecoin products. The United Arab Emirates is emerging as a key global economic player, and we believe our users will find great value in this Dirham-pegged token. This stablecoin will become an indispensable tool for businesses and individuals alike who are seeking secure and effective ways of transacting in the UAE Dirham, whether it be for cross-border payments, trade, or diversifying digital portfolios.”

The stablecoin sector has grown considerably, with the global market now valued at approximately $150 billion. Tether’s USDT accounts for more than $115 billion of that value, and the industry is expected to see further expansion, potentially reaching $2.8 trillion by 2028. The adoption of cryptocurrencies in the UAE has seen a significant surge since 2022, largely due to the establishment of the Virtual Asset Regulatory Authority, the world’s first autonomous crypto regulator. This supportive regulatory environment, particularly in cities like Dubai and Abu Dhabi, has cemented their status as global centers for blockchain innovation and digital assets.

Phoenix Group’s Co-Founder and Group CEO, Seyedmohammad Alizadehfard, shared his enthusiasm for the collaboration.

“We are thrilled to be working with Tether to bring a UAE Dirham-pegged stablecoin to market. We believe it will have a transformative impact on the digital economy, not just in the region but beyond,” he said. Alizadehfard also highlighted that the collaboration reinforces their commitment to offering innovative financial solutions to customers, emphasizing that Abu Dhabi’s forward-thinking approach to blockchain and digital assets made it an ideal environment for such an initiative.

This partnership marks a significant step forward in advancing the UAE’s position in the digital financial world. The Dirham-pegged stablecoin is expected to provide businesses and consumers with more efficient tools for managing their digital assets, cross-border transactions, and international trade, all while benefiting from the security and stability of the UAE’s national currency.