Abu Dhabi’s financial landscape is set for a major digital shift as powerhouse entities International Holding Company (IHC), ADQ, and First Abu Dhabi Bank (FAB) revealed a collaborative project to introduce a Dirham-backed stablecoin. This initiative aims to significantly enhance payment solutions and digital infrastructure within the UAE.
The new digital currency, pegged to the UAE Dirham, is designed for full regulation by the UAE Central Bank. Pending final regulatory green lights, the country’s largest bank, FAB, will issue the stablecoin, according to a joint announcement from the participating firms.
Operating on the ADI blockchain infrastructure, this stablecoin targets widespread use among consumers, corporations, and financial institutions. It’s poised to underpin advanced applications, including machine-to-machine (M2M) transactions and processes driven by artificial intelligence.
“This new stablecoin represents a transformative step forward and will revolutionise the way both consumers and businesses engage with trusted blockchain payments in the UAE,” stated Hana Al Rostamani, Group Chief Executive of FAB, highlighting the project’s potential.
Stablecoins offer stability in the often-volatile crypto market by linking their value to assets like fiat currencies (such as the Dirham), government bonds, or commodities. This makes them a more reliable medium for digital transactions compared to unpegged crypto assets.
This development aligns with the UAE Central Bank’s accelerated efforts in the digital currency domain, notably its “Digital Dirham” initiative launched in March 2023. The central bank has already established regulations for stablecoins, providing a clear operational framework, and recently introduced a distinct symbol for its upcoming digital dirham.
Mohamed Alsuwaidi, Managing Director and Group CEO of ADQ, described the launch as a “pivotal step” toward reinforcing the nation’s digital backbone. “As we move towards an increasingly digital and connected economy, the stablecoin will provide a solution that is secure, efficient and scalable,” Alsuwaidi remarked.
The ADI blockchain, developed by the ADI Foundation, provides the technological foundation. The foundation boasts partnerships with governments across more than 20 countries, expanding its reach for compliant blockchain solutions.
The UAE continues to build its reputation as a hub for digital assets. Regulatory bodies like the Abu Dhabi Global Market (ADGM) and Dubai’s Virtual Assets Regulatory Authority (VARA) have already implemented frameworks governing cryptocurrencies.
Recent milestones include AE Coin becoming the first regulated digital currency approved in the UAE last December. Furthermore, Tether, the issuer behind the world’s largest stablecoin (USDT), gained approval last August to explore stablecoin development within the region.
The introduction of this new Dirham-backed stablecoin is anticipated to create substantial ripple effects across the UAE’s financial, commercial, and trade sectors.