UAE Stablecoin Gains Central Bank's AED Approval Soon

UAE Stablecoin Backed by Central Bank’s AED Reserves

The Central Bank of the United Arab Emirates (CBUAE) has granted in-principle approval to AED Stablecoin, placing it at the forefront of the UAE’s efforts to launch a regulated dirham-pegged stablecoin. This approval comes under the CBUAE’s recently introduced UAE stablecoin regulation within its Payment Token Service Regulation framework, signaling a pivotal development in UAE financial regulations for cryptocurrencies.

UAE Central Bank Stablecoin Regulation: A Step Toward Safer Crypto Payments

AED Stablecoin’s approval eases concerns raised by the UAE central bank stablecoin regulation, which restricts the use of crypto for payments unless it involves licensed dirham-pegged tokens. If fully licensed, AED Stablecoin’s AE Coin could serve as a key local trading pair on crypto exchanges and decentralized platforms. It may also enable merchants across Dubai and the UAE to accept stablecoin payments, further promoting the use of regulated crypto assets for goods and services.

UAE Stablecoin and Fund Regulations: Ensuring Security for Investors

The UAE stablecoin regulation prioritizes fully cash-backed assets, excluding algorithmic stablecoins and privacy tokens from its framework. Issuers, including AED Stablecoin, are required to hold cash reserves in escrow within UAE banks, or alternatively, allocate 50% of reserve assets to cash and the rest to UAE government bonds and CBUAE Monetary Bills. This system offers a secure structure for users and investors, in line with UAE fund regulations.

Competition and Dubai's Crypto-Friendly Environment

AED Stablecoin’s introduction under Dubai stablecoin regulation sets it up to compete with USDT stablecoin, issued by Tether. Tether has partnered with local firms to launch its own dirham-pegged stablecoin. As UAE crypto news highlights, the region’s crypto-friendly laws continue to attract major players, including OKX and M2 Exchange, which have launched platforms to convert dirhams directly into Bitcoin and Ethereum.

This new regulatory approach aligns with the UAE's vision to become a global leader in crypto regulation, with Dubai stablecoin policies supporting this goal. With stablecoin regulations in place, the UAE central bank is setting a strong foundation for the future of digital currencies in the region.

Also Read: OKX Launches in Dubai Despite UAE Regulatory Crackdown