Tether has announced plans to issue a stablecoin pegged to the United Arab Emirates Dirham (AED), which would be fully backed by a UAE-based liquidity reserve to ensure stability for users.
Stablecoins have become a key sector in the cryptocurrency industry, with Tether’s USDT leading the way in revenue generation, earning $93.75 million.
Tether to launch AED-backed stablecoin
Tether has launched a stablecoin pegged to the UAE dirham (AED) in partnership with UAE-based multi-billion dollar technology conglomerate Phoenix Group PLC, and with the backing of Green Acorn Investments Ltd. The new token joins Tether’s existing stablecoins, including USDT, EURT, CNHT, MXNT, XAUT, and aUSDT.
“Tether’s dirham-pegged stablecoin will provide users with a seamless and cost-effective way to access the benefits of the AED. The digital asset will streamline international trade and remittances, reduce transaction fees, and provide a hedge against currency fluctuations, thus playing an important role in the financial ecosystem in the UAE and beyond,” the announcement read.
Tether’s move is aimed at increasing liquidity in the cryptocurrency market and providing more options for traders. The development could have a positive impact on the broader cryptocurrency ecosystem by attracting more regional investors and businesses. Additionally, the expansion could boost Bitcoin prices, given the historical positive correlation between Bitcoin and USDT market capitalizations.
Read more: 9 Best Crypto Wallets to Store Tether (USDT)
Tether’s interest in the UAE is in line with the region’s supportive stance towards cryptocurrencies and blockchain technology, as the UAE has been active in establishing a regulatory framework to oversee the use of digital assets.
“We are very excited about a UAE dirham pegged stablecoin. The opportunity is enormous,” Ardoino wrote.
The UAE has cemented its reputation as a crypto-friendly destination, with a growing number of companies involved in the sector. Dubai, in particular, has become a key hub for blockchain activity, hosting conferences and fostering crypto innovation.
“I think Dubai is already the crypto hub. When I first came to Dubai, there were only a handful of crypto companies. Now there are probably thousands. On top of that, there are thousands of companies in the process of registering, licensing, etc. Almost every night of the week, there’s a crypto event going on in Dubai: dinner, seminar, etc. I get invited to multiple events every night,” former Binance CEO Changpeng Zhao emphasized in an AMA in mid-2023.
UAE strengthens reputation as global cryptocurrency hub
Additionally, the Dubai Financial Services Authority (DFSA) and the Abu Dhabi Global Market (ADGM) have implemented regulations regarding the licensing and supervision of digital asset businesses in their jurisdictions, including oversight of cryptocurrency exchanges.
In June, the UAE Central Bank introduced the Payment Token Services Regulation, recognizing digital money services as a financial activity that requires central bank licensing and supervision. The launch of a UAE-pegged stablecoin could pave the way for other stablecoins to seek licensing under this new regulatory framework.
Meanwhile, the stablecoin industry is becoming increasingly profitable, with total supply approaching an all-time high of over $160 billion for the first time in over two years. Tether’s USDT dominates the market, generating $93.75 million in revenue, followed by Circle’s USDC with $28.89 million.
Read more: Guide to the best stablecoins in 2024
Stablecoin supply. Source: Artemis
The growing supply of stablecoins reflects increased adoption and deeper integration within the crypto ecosystem, signaling growing trust and reliance on these assets for transactions, payments and financial services.
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