The Central Bank of the UAE (CBUAE) has given initial approval for the AED Stablecoin as part of its Payment Token Service Regulation. This makes AED Stablecoin the first regulated dirham-pegged stablecoin in the UAE, easing fears about restrictions on crypto payments due to recent regulations.
CBUAE Approval Eases Crypto Payment Concerns
The CBUAE’s approval enhances the chances for the AED Stablecoin to become the first licensed dirham-pegged stablecoin, reducing worries about a potential crypto payment ban.
This approval allows merchants to accept AE Coins, facilitating everyday use of digital currency and boosting the cryptocurrency market in the UAE. The framework mandates that issuers back their stablecoins fully with cash held in a separate escrow account in UAE banks.
Competition from Tether
The AED Stablecoin will likely face competition from Tether, which is developing a similar dirham-pegged stablecoin in partnership with local firms. This rivalry could impact market performance and user acceptance.
Despite competition, the UAE’s favorable regulatory environment is attracting major crypto players, such as OKX and M2, making it easier for residents to engage in cryptocurrency trading.
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