Tether has announced that it would introduce a new stablecoin linked to the United Arab Emirates (UAE) dirham. The company wants to address the rising interest in Gulf money and also provide options other than the U.S. dollar.
Stablecoins are digital currencies created to always maintain the same value. These tokens are linked to regular currencies like the U.S. dollar or euro.
Tether operates the biggest stablecoin in the world with its dollar-backed token (USDT), meant to hold a value of $1. The approximately $117 billion in use makes up most of the $169 billion stablecoin market.
Tether Aims To Create An Alternative To The U.S. Dollar
The Chief Executive Officer of Tether Paolo Ardoino stated that the main goal is to create an alternative for people to use besides the U.S. dollar.
During a conference in Dubai, Ardoino talked about the new dirham-pegged unit. He said he as global trade changes, more and more people will make the dirham their preferred choice for payments.
According to a Twitter post, Paolo Ardoino said, “We’re pleased to announce this initiative to develop Tether’s Dirham-pegged stablecoin.”
Ardoino further added that many people are interested in keeping AED (dirham) even outside the UAE, noting that the country and its finances are stable and safe.
As competition becomes tough in the Gulf region, the UAE, aims to become the preferred center for the crypto industry.
It quickly allowed cryptocurrency payments for things like real estate and school fees, increasing adoption and transactions, while creating rules for virtual assets in both Abu Dhabi and Dubai.
Tether Aims To Make Transactions For Trade Smoother And More Efficient
Bitcoin surged in the first half of the year after U.S. regulators approved exchange-traded funds for the virtual currency. Tether also offers stablecoins tied to the euro, the Mexican peso, China’s yuan, and gold.
Regulators have warned for a long time about market risks from using crypto assets. They are concerned that growing stablecoin reserves could expose the extensive financial system to bigger risks.
The U.S. warns there could be a quick outflow if holders quickly replace tokens with traditional currencies.
Ardoino said Tether’s recent growth is fueled by its use as a substitute for the dollar in emerging markets like Vietnam, Turkey, Brazil, Argentina, and parts of Africa, where the U.S. dollar is sometimes scarce.
Tether recently stated that the dirham stablecoin will be “fully backed” by liquid reserves in the UAE.
Phoenix and Tether announced that the dirham stablecoin will be launched in partnership with Abu Dhabi-listed Phoenix Group and with backing from Green Acorn Investment.
The announcement revealed that the new stablecoin aims to make international trade and remittances easier, cut transaction fees, and protect against currency changes.
