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The Central Bank of the UAE has granted an initial license for the AED Stablecoin under its Payment Token Service Regulation. This makes it the first potentially regulated dirham-pegged stablecoin in the UAE.
This approval alleviates concerns regarding crypto payment restrictions linked to the UAE Central Bank’s licensing framework.
CBUAE Approval of AED Stablecoin Eases Crypto Payment Concerns in the UAE
The CBUAE’s recent approval enhances AED Stablecoin’s potential to be the first licensed dirham-pegged stablecoin, lessening worries over a possible crypto payment ban.
Currently, cryptocurrencies are restricted in payments unless involving licensed dirham-pegged tokens. This approval supports regulated digital currencies.
If fully approved, AED Stablecoin could gain traction as a local trading option, making it easier for merchants to accept it as payment and thereby increasing crypto usage in the UAE.
However, strict regulations exist: algorithmic stablecoins and privacy tokens are prohibited, and issuers must back their coins with cash in a UAE bank escrow account.
AED Stablecoin Faces Competition from Tether in the UAE Market
AED Stablecoin will compete with Tether, the issuer of the largest stablecoin, USDT, which has partnered with local companies to develop a dirham-pegged stablecoin.
This competition could influence the adoption and performance of stablecoins in the local market.
The UAE is fostering a crypto-friendly environment, attracting major players like OKX, which recently launched a trading platform, and M2, allowing local residents to convert dirhams into Bitcoin and Ether.
This demonstrates the UAE’s growing accessibility for crypto trading and investment.
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