On August 21, Tether, the stablecoin issuer behind USDT, announced plans to introduce a new stablecoin pegged to the United Arab Emirates dirham (AED). The upcoming stablecoin was developed in collaboration with UAE-based technology conglomerate Phoenix Group PLC and with support from Green Acorn Investments Ltd, and is part of Tether’s growing stablecoin portfolio. It is the latest addition to the portfolio.
Tether’s stablecoin lineup includes currencies pegged to USDt (pegged to the US dollar), EURT (pegged to the euro), CNHT (pegged to the Chinese Yuan), MXNT (pegged to the Mexican peso), and XAUT (pegged to the Mexican peso). It already contains some tokens. pegged to gold), and USDT (pegged to the Australian dollar).
According to Tether, each dirham-pegged token will be fully backed by a liquidity reserve based in the UAE, ensuring that the stablecoin maintains a consistent value tied to the AED. This approach is consistent with Tether’s established readiness standards.
The new dirham-pegged stablecoin is expected to offer several benefits to users, especially in the areas of international trade, remittances, and digital transactions. By leveraging blockchain technology, stablecoins facilitate seamless and cost-effective transactions, reduce fees, and provide a hedge against currency fluctuations.
Tether CEO Paolo Ardoino emphasized the strategic importance of this initiative, noting that the UAE is rapidly emerging as an important global economic hub. Ardoino expressed confidence that the dirham-peg token will be a valuable addition to Tether’s services, providing users with a secure and efficient means of transacting with AEDs. He highlighted the potential utility for cross-border payments, trading and portfolio diversification in the digital asset space.
According to Tether, progressive regulatory developments such as the establishment of the Crypto Asset Regulatory Authority, the world’s first independent crypto regulator, have led to a significant increase in the use of cryptocurrencies in the UAE since 2022. With a favorable regulatory environment in cities such as Dubai and Abu Dhabi, the UAE has established itself as a global hub for innovation in crypto assets and blockchain technology.
Tether’s dirham-pegged stablecoin will apply for a license under the UAE Central Bank’s recently announced Payment Token Services Regulation, further integrating it into the region’s financial framework. The move could strengthen the role of stablecoins in the UAE’s financial markets and contribute to the wider adoption of digital currencies in the region.
The global market for stablecoins is currently valued at approximately $150 billion, with Tether’s USDt alone having a market capitalization of over $115 billion. Industry forecasts say the market could grow to $2.8 trillion by 2028, reflecting the growing role of stablecoins in the global financial landscape.
Seyed Mohammad Alizadefard, co-founder and group CEO of Phoenix Group, expressed his enthusiasm about the collaboration with Tether and highlighted the transformative potential of dirham-pegged stablecoins in the region’s digital economy. Mr. Alizadefard emphasized that this partnership highlights both companies’ commitment to innovation and excellence and reflects their dedication to providing financial solutions that meet the evolving needs of their customers. He also pointed out that Abu Dhabi’s forward-thinking approach to blockchain and digital assets makes it an ideal starting point for this new stablecoin.
Featured image via Pixabay
