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Cryptocurrency News Articles
UAE Grants Approval for First-Ever Regulated Stablecoin, While Bahrain Launches BTC Product With No Downside
Oct 21, 2024 at 01:00 pm
As stablecoins become the lifeblood of the digital asset world and a critical bridge to traditional finance, more countries are seeing homegrown
The United Arab Emirates is now home to the first-ever regulated stablecoin after the central bank granted approval for AED Stablecoin to issue AE Coin, a stablecoin pegged to the dirham.
The country has seen rapid growth in its digital asset sector, with a Chainalysis report revealing a 42% uptick in the year ending June 2024. This growth is four times faster than the region’s average, making the UAE the third-largest digital asset market in the Middle East after Turkey and Saudi Arabia.
Now, AED Stablecoin is set to launch AE Coin, which will be fully backed by transparent and regularly audited fiat currency reserves, the issuer said. The company describes AE Coin as a multifaceted digital currency that can be used for saving, investing and making day-to-day payments.
“As the first-ever stablecoin regulated by the Central Bank of the UAE, AE Coin will be revolutionizing the digital currency landscape,” said Ramez Rafeek, general manager of AED Stablecoin.
The company did not reveal which blockchain will host its stablecoin, though it is likely a private ledger. AED Stablecoin touted the use of “state-of-the-art blockchain technology with multi-layer encryption.”
AED Stablecoin plans to expand into e-commerce payments, partnerships with merchants and the introduction of a mobile wallet app for users in the near future. It also intends to integrate with decentralized finance (DeFi) platforms.
The move comes as the UAE has become a hotspot for digital asset activity in the Middle East, with Chainalysis data showing that only Israel has a higher share of digital asset activity taking place on DeFi protocols.
Meanwhile, in Bahrain, one of the country’s largest banks has announced the launch of a BTC-linked product that guarantees no downside despite BTC’s price fluctuations.
The National Bank of Bahrain (NBB) has partnered with ARP Digital to launch the product, which is aimed at meeting the growing demand for structured digital asset products from institutional investors in the region.
The bank says the product will offer investors access to an uptick in the price of BTC while guaranteeing 100% protection against any dips. It is designed for “risk-averse investors seeking exposure to bitcoin while fully insulating their principal investment from market fluctuations.”
The bank did not provide further details on the product, though it is likely structured around options trading, where the bank will purchase put options that allow it to sell its stash at a set price within a particular timeframe. While these options offer protection against the downside, they have costly premiums and limit the upside in case BTC shoots up.
NBB has noted that the profits are “capped within a predetermined threshold” due to these limitations. Interested investors can approach their relationship managers for more details on the product.
“With our expertise in digital assets and NBB’s extensive presence in the financial sector, we have developed a product that facilitates access to [BTC] within a secure framework,” said Abdullah Kanoo, one of the founders of ARP Digital.
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