On August 21, Tether, the stablecoin issuer behind USDT, announced plans to introduce a new stablecoin pegged to the United Arab Emirates Dirham (AED). The forthcoming stablecoin, developed in collaboration with UAE-based tech conglomerate Phoenix Group PLC and with support from Green Acorn Investments Ltd, marks the latest addition to Tether’s growing portfolio of stablecoins.
Tether’s stablecoin lineup already includes several currency-pegged tokens such as USDt (pegged to the U.S. dollar), EURT (pegged to the Euro), CNHT (pegged to the Chinese Yuan), MXNT (pegged to the Mexican Peso), XAUT (pegged to gold), and aUSDT (pegged to the Australian Dollar).
According to Tether, each Dirham-pegged token will be fully backed by liquid reserves based in the UAE, ensuring that the stablecoin maintains a consistent value tied to the AED. This approach aligns with Tether’s established reserve standards.
The new Dirham-pegged stablecoin is expected to offer several advantages for users, particularly in the areas of international trade, remittances, and digital transactions. By leveraging blockchain technology, the stablecoin will facilitate seamless, cost-effective transactions, reducing fees and offering a hedge against currency fluctuations.
Paolo Ardoino, CEO of Tether, emphasized the strategic importance of this initiative, noting that the UAE is rapidly emerging as a significant global economic hub. Ardoino expressed confidence that the Dirham-pegged token would be a valuable addition to Tether’s offerings, providing users with a secure and efficient means of transacting in AED. He highlighted its potential utility for cross-border payments, trading, and portfolio diversification within the digital asset space.
Tether says the UAE has experienced significant growth in cryptocurrency usage since 2022, driven by progressive regulatory developments such as the establishment of the Virtual Asset Regulatory Authority, the world’s first independent crypto regulator. The favorable regulatory environment in cities like Dubai and Abu Dhabi has positioned the UAE as a global hub for innovation in crypto assets and blockchain technology.
Tether’s Dirham-pegged stablecoin is expected to seek licensing under the UAE Central Bank’s recently announced Payment Token Services Regulation, further integrating it into the region’s financial framework. This move could solidify the stablecoin’s role in the UAE’s financial markets and contribute to the broader adoption of digital currencies in the region.
The global market for stablecoins is currently valued at approximately $150 billion, with Tether’s USDt alone commanding a market cap of over $115 billion. Industry projections suggest that the market could grow to $2.8 trillion by 2028, reflecting the expanding role of stablecoins in the global financial landscape.
Phoenix Group’s Co-Founder and Group CEO, Seyedmohammad Alizadehfard, expressed enthusiasm about the collaboration with Tether, highlighting the transformative potential of the Dirham-pegged stablecoin in the region’s digital economy. Alizadehfard emphasized that the partnership underscores both companies’ commitment to innovation and excellence, and reflects their dedication to providing financial solutions that cater to the evolving needs of customers. He also noted that Abu Dhabi’s forward-thinking approach to blockchain and digital assets makes it an ideal launchpad for this new stablecoin.
Featured Image via Pixabay
