Tether to Launch UAE Dirham-Pegged Stablecoin

One of the large cryptocurrency companies, Tether, is planning to introduce a new stablecoin pegged to the United Arab Emirates dirham. According to Tether, this move would be part of their bid to tap the rising demand for the Gulf currency, which became an alternative to the U.S. dollar.

Stablecoins are digital tokens backed by ordinary currencies. They have been increasingly used for payments and trading in digital currencies such as Bitcoin outside the formal banking system.

Tether operates the world’s biggest stablecoin, USDT, a digital currency pegged to the U.S. dollar and constantly holding a $1 price. With a circulation market value of roughly $117 billion, USDT makes up the lion’s share of the total value of stablecoins, which are estimated at around $169 billion, according to CoinGecko. During a conference in Dubai, Tether’s Chief Technology Officer, Paolo Ardoino, stated that other alternatives to the USD needed to be created.

He expressed confidence that the dirham could be poised to become a favourite currency as world trade evolves. There was enormous interest, Ardoino said, for holding dirhams outside the United Arab Emirates, an interest he attributed to the stability of the nation and its robust financial system.

While the United Arab Emirates pegs its currency to the U.S. dollar, just like other Gulf countries do, it has been tachymeter-quick in efforts to top the globe in hosting the preeminent cryptocurrency hub. It has not been very nice in allowing crypto payments for everything from real estate to education, with adoption rates and volume consequently soaring. Abu Dhabi and Dubai have drafted rules for virtual assets as a way to oversee the growing industry.

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Currently, Tether is pegged to the euro, the Chinese yuan, the Mexican peso, and gold. With the introduction of a dirham-pegged stablecoin, it will find a place within the geographical setting that resonates with Tether’s emphasis on emerging markets, where the company’s stablecoins are used as dollar surrogates, such as in Argentina, Brazil, Turkey, Vietnam, and most parts of Africa.

Tether described the new dirham stablecoin as “fully backed by liquid reserves” in the UAE. The launch will take place through a partnership with Abu Dhabi-listed Phoenix Group, a crypto mining and blockchain conglomerate, along with additional support from an investment firm named Green Acorn Investment. This move is intended to ease international trade and remittances, cut transaction fees, and eliminate currency fluctuations.

Although he did not disclose the exact date for the launch of the dirham stablecoin, Ardoino hinted that the licensing process with the UAE Central Bank could take months. Additionally, Seyed Mohammad Alizadehfard further disclosed that the blockchain platform the company wanted to pair with this stablecoin was still awaiting final approval from the Phoenix Group Chief Executive Officer.

People May Ask

How does a stablecoin work, and what is it all about?

A stablecoin is a kind of cryptocurrency that is tied to another fiat currency. The UAE dirham is pegged to these, or most commonly the U.S. dollar. They are also commonly collateralized by a reserve of the pegged currency, guaranteeing that the value does not deviate too much from that value.

This intrinsic stability makes stablecoins relatively useful for transactional purposes and works as a hedge against the volatilities seen within other cryptocurrencies, such as Bitcoin.

Why Is Tether Launching a Stablecoin Pegged to the UAE Dirham?

Tether is launching a stablecoin pegged to the dirham, which will create demand for the Gulf currency as an alternative to the U.S. dollar in international trade and remittances. The UAE dirham has depicted much stability, and the country’s strategic position as a financial hub makes this currency very favorable for worldwide trade.

How will the new dirham-pegged stablecoin benefit users?

The objective of the dirham stablecoin is to facilitate international trade and remittances, cut transaction fees, and shield holders from the currency’s swings. This offers a stable, liquid option for those wanting to hold or deal in dirhams outside the UAE.

How does this affect the UAE’s cryptocurrency market?

A dirham-pegged stablecoin of Tether would greatly enhance the UAE’s position as a hub for cryptocurrencies worldwide. It would enable a larger adoption of digital assets in the region and attract more foreign businesses willing to operate within a stable and regulated environment.

What are the regulatory implications of Tether’s dirham stablecoin?

The UAE Central Bank is pending approval for the launch of the dirham stablecoin. Regulatory approval processes usually last for a number of months, therefore the successful launch of this coin is expected to set precedence for future stablecoin projects in the region.

How does Tether’s dirham stablecoin stand against other available stablecoins in the market?

The new dirham stablecoin will join Tether’s existing portfolio of stablecoin offerings, which are now pegged to other major currencies, such as the U.S. dollar, the euro, and the Chinese yuan. This would bring special advantages to the Gulf area, pertaining to decreased transaction costs for cross-border trade and remittances.

What is the role of Phoenix Group going to be in the launch of the dirham stablecoin?

The Abu Dhabi-listed crypto mining and blockchain conglomerate Phoenix Group is to partner with USPD Entrar in launching the dirham stablecoin. Phoenix Group will provide the required structure and backing in the development and implementation of the stablecoin.

When is the dirham stablecoin expected to be put into use?

Though no word has yet been given on the date of launch, Tether CEO Paolo Ardoino said in a statement last month that licensing would be done within a few months of the UAE Central Bank. Regulatory approvals will trigger the availability of the stablecoin shortly after.

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