Abu Dhabi Trio to Launch Dirham-Backed Stablecoin

Three big organizations in Abu Dhabi are going to team up for the creation of a new digital currency stablecoin. This stablecoin will be tied to the UAE’s official currency, the dirham, and overseen by the UAE’s central bank to ensure it’s safe and legal. 

This initiative is taken to make digital payments easier and faster for people and businesses in the UAE, helping the country embrace modern digital money systems.

To make this initiative possible, the ADQ, a major government investment fund; First Abu Dhabi Bank, the UAE’s biggest bank; and International Holding Co. are going to collaborate. They need approval from regulators to launch it, ensuring it meets legal standards.

As per the reports, the stablecoin will be created by First Abu Dhabi Bank (FAB). FAB’s CEO, Hana Al Rostamani, said that, “This digital currency will have a big effect on many industries and could change how UAE consumers and businesses use and secure blockchain payments, making transactions easier and more trusted.”

The statement released on Monday also states that, “This stablecoin will be used as a reliable digital currency across a wide range of everyday scenarios.” It further added that, “It will also support emerging digital use cases such as machine-to-machine and AI.”

In December, the UAE’s central bank gave the green light to AE Coin, a digital currency tied to the UAE’s currency, the dirham. Stablecoins like AE Coin are popular globally because they are linked to traditional money, making their value steady and less risky compared to volatile cryptocurrencies like Bitcoin.

On 21st August, 2024, leading stablecoin provider Tether also announced that it will introduce a stablecoin based on the UAE Dirham (AED). With this move, Tether’s activities have significantly expanded in the Middle East, where blockchain use is growing quickly.