The Central Bank of the UAE (CBUAE) has given initial approval for AED Stablecoin under its new Payment Token Service regulations. This makes AED Stablecoin the first regulated issuer of a dirham-pegged stablecoin in the UAE, addressing concerns about the potential ban on crypto payments.
With this approval, the AED Stablecoin can gain traction as a legitimate digital currency, allowing merchants to accept it for daily transactions and enhancing cryptocurrency adoption in the region.
However, the CBUAE’s framework sets strict requirements, prohibiting algorithmic stablecoins and requiring issuers to back stablecoins fully with cash held in a UAE bank. This ensures the security and reliability of the stablecoins.
AED Stablecoin Faces Competition from Tether in the UAE Market
AED Stablecoin will compete with Tether, the issuer of USDT, which is developing its own dirham-pegged stablecoin in collaboration with local companies.
The UAE’s favorable regulatory environment is drawing more crypto players, such as OKX and M2, which are launching platforms to facilitate crypto transactions using local currency. This highlights the UAE’s growing accessibility for cryptocurrency trading and investment.
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