AED Stablecoin Company announced having received the first approval from the UAE Central Bank to issue a dirham-backed stablecoin.
The United Arab Emirates (UAE) will soon receive its first regulated stablecoin.
AED Stablecoin LLC has announced that it has received approval in principle from the UAE Central Bank to issue and establish its own dirham-linked stablecoin digital currency.
In a statement issued on Monday, the company called itself a pioneer in having obtained the permission that will allow it to become the first authorized entity in the region to launch a stablecoin backed by reserves of the local currency. The authorization issued by the central bank falls under its framework for regulating payment token services, according to the note.
Dubbed AE Coin, the new currency promises to revolutionize financial services by offering unprecedented stability, security and efficiency, the note continues.
“As a stable regulated currency, it provides secure and seamless payment solutions while fostering the growth of the UAE’s digital economy,” it reads. Being pegged to a fiat currency, AE Coin will be backed by “transparent reserves” of the dirham and “regular audits,” the company assures.
The token will offer fast and low-cost transactions, while promising the ability to be used for a variety of purposes, including business-to-business payments, individual transactions and investments. The stablecoin aims to foster economic growth and innovation in the UAE by providing a secure and efficient digital currency, the issuer said.
AED Stablecoin added that its token will offer additional features such as integration with the decentralized financial ecosystem (DeFi), allowing users to make credits and loans on decentralized platforms.
In addition, the ambitious roadmap includes integration with decentralized applications (dApps), listings on exchanges and ongoing technological advancements, added the company, which said it plans to form strategic partnerships and forge alliances with merchants to increase real-world use cases, making the coin more accessible for everyday transactions.
AE Coin is intended to support the UAE’s booming digital economy, enabling simpler and more secure payments that contribute to the country’s financial innovation.
Interest in stablecoins lands in the UAE
The news comes at a time of global growth for the market for stablecoins, a type of digital token built on Blockchain that, unlike most cryptocurrencies, maintains a stable price; often with parity to a fiat currency such as the U.S. dollar.
Banks and other financial institutions in the traditional industry have been actively exploring transactions with this class of tokens, as well as issuing their own stable coins. Also within the cryptocurrency industry, several companies such as Ripple are working to advance this field.
Tether’s USDT dominates the stablecoin market-valued at more than $170 billion-with a current capitalization of $119 billion, according to CoinMarketCap data.
This development coincides with the UAE’s efforts to position itself as a global cryptocurrency and Web3 hub. Local regulators have been implementing regulatory policies that are more favorable to the new asset class. Dubai implemented a sector-specific framework with a licensing system for digital currency exchanges.
In the middle of this year, the UAE Central Bank’s board of directors approved a new system for overseeing and licensing stablecoins, raising concerns about potential restrictions on the use of cryptocurrencies other than authorized dirham-linked tokens as payment mechanisms.
A few days ago, UAE regulators removed VAT for cryptocurrency transactions.
Tether had already anticipated its intentions to launch its own dirham-linked stablecoin when it announced in August a partnership with an Abu Dhabi-based company in order to advance these plans.
