Key Points
- Tether is collaborating with UAE’s Phoenix Group PLC to create a stablecoin pegged to the United Arab Emirates Dirham (AED), expanding its range of stablecoin offerings.
- The new stablecoin aims to streamline international trade and remittances while adhering to the UAE Central Bank’s Payment Token Services Regulation, potentially transforming the digital economy in the region.
Tether Expands Stablecoin Offerings with UAE Dirham Token
Tether, the leading stablecoin issuer, has announced plans to develop a new stablecoin pegged to the United Arab Emirates Dirham (AED). This move, revealed on August 21, 2024, marks Tether’s entry into the Middle Eastern digital currency market and expands its portfolio of stablecoins, which already includes tokens pegged to the US Dollar, Euro, and other major currencies.
The new AED-pegged stablecoin will be launched in partnership with Phoenix Group PLC, a prominent UAE tech conglomerate, and supported by Green Acorn Investments Ltd. Tether states that each token will be fully backed by liquid UAE-based reserves, maintaining the company’s commitment to transparency and stability.
Regulatory Compliance and Market Potential
Tether’s Dirham-pegged stablecoin is positioned to pioneer in seeking licensing under the UAE Central Bank’s recently announced Payment Token Services Regulation. This proactive approach to regulatory compliance could set a precedent for future stablecoin projects in the region.
Paolo Ardoino, CEO of Tether, emphasized the strategic importance of this move, stating, “The United Arab Emirates is becoming a significant global economic hub, and we believe our users will find our Dirham-pegged token to be a valuable and versatile addition.”
Impact on Regional and Global Finance
Introducing a Dirham-pegged stablecoin is expected to have far-reaching implications for regional and global finance. Tether aims to facilitate more efficient cross-border transactions, reduce fees, and offer a hedge against currency fluctuations by providing a digital representation of the AED on the blockchain.
Seyedmohammad Alizadehfard, Co-Founder and Group CEO of Phoenix Group, expressed optimism about the collaboration, noting, “This partnership with Tether not only underscores our commitment to innovation and excellence but also reflects our dedication to providing financial solutions that meet the needs of our customers.”
As the global stablecoin market continues to grow, with projections reaching $2.8 trillion by 2028, Tether’s expansion into the UAE market could significantly influence the adoption of digital assets in the region. The move aligns with the UAE’s ambition to become a global cryptocurrency and blockchain innovation hub, supported by its progressive regulatory environment.
