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The Central Bank of the UAE (CBUAE) has tentatively approved AED Stablecoin under its Payment Token Service Regulation. This positions AED Stablecoin to be the first regulated dirham-pegged stablecoin in the UAE, easing concerns about potential crypto payment restrictions.
CBUAE Approval Eases Crypto Payment Concerns
The CBUAE’s approval reduces worries about a crypto payment ban following its new licensing framework. This framework allows only licensed dirham-pegged tokens for transactions, indicating support for regulated digital currencies.
The approval could increase the use of digital currencies, making it easier for merchants to accept AE Coins for goods and services. This would boost cryptocurrency usage in the local market.
However, the licensing framework imposes strict rules, banning algorithmic stablecoins and privacy tokens in favor of fully backed stablecoins. Issuers must maintain cash reserves in dirhams within UAE banks to ensure stability.
AED Stablecoin Faces Competition
AED Stablecoin will likely compete with Tether, which recently partnered with local firms to create a dirham-pegged stablecoin. This competition may influence market dynamics and user adoption.
The UAE’s favorable regulatory atmosphere is attracting major crypto players. OKX has launched a trading platform, receiving a full license to operate and offer derivatives trading, while M2 allows residents to convert dirhams to Bitcoin and Ether.
This development shows that the UAE is becoming increasingly accessible for crypto trading and investment.
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