The Central Bank of the UAE (CBUAE) has granted the country’s first regulated stablecoin issuer an in-principle approval to launch its AE Coin.
According to the issuer, the Dirham-pegged AE Coin would enhance payments and transactions in the region, creating a better experience for individuals and businesses.
UAE Gives Approval To Dirham-pegged Stablecoin Issuer
The AED Stablecoin LLC has received in-principle approval from the Central Bank of the United Arab Emirates (CBUAE) to issue its AED-pegged stablecoin – AE Coin.
With this in-principle approval, the AED Stablecoin LLC is now a leader in the race to become the first issuer of a regulated Dirham-pegged stablecoin in the country.
This approval reflects the country’s innovative vision and commitment to the UAE Digital Government Strategy 2025. Also, this move discards concerns relating to potential restrictions on cryptocurrency payments, which had emerged following the CBUAE’s release of its licensing framework.
The CBUAE’s framework prohibits the use of cryptocurrencies for payments unless they involve licensed dirham-pegged tokens.
If fully approved, the AE Coin could become a seamless payment solution for goods and services and serve as a local trading pair for other digital assets on cryptocurrency exchanges and decentralized platforms.
The AED Stablecoin LLC revealed that the AE Coin will revolutionize the UAE’s “financial services by offering unparalleled efficiency, security, and stability.”
The General Manager of AED Stablecoin LLC, Ramez Rafeek, expressed his excitement about the approval, saying,
We are very pleased to have received the approval of the Central Bank of the UAE to start issuing AE Coin in accordance with the ‘Payment Token Services Regulation’ Circular. As the first-ever stablecoin regulated by the Central Bank of the UAE, AE Coin will revolutionize the digital currency landscape, providing users with an unparalleled blend of financial freedom, unwavering stability, and top-tier security.
AED Stablecoin May Face Competition From Tether
While this is a welcome development from AED Stablecoin LLC, the firm may be faced with competition from Tether, the issuer of USDT, the current largest stablecoin in the world by market cap.
Last August, Tether announced that it would introduce a new stablecoin linked to the United Arab Emirates (UAE) Dirham in partnerships with local firms Phoenix Group and Green Acorn Investments.
That means the AE Coin may compete with Tether’s existing range of fiat-pegged tokens, including USDT and EURT.
UAE’s Crypto-Friendly Environment
The UAE’s regulatory environment is increasingly becoming cryptocurrency-friendly, attracting major players in the crypto industry.
For instance, the UAE attracted OKX, Binance, and other crypto exchanges into its region in September. OKX launched a retail and institutional trading platform in the UAE after receiving a full license.
Crypto exchange Bybit secured a provisional crypto license from Dubai’s regulator, the Virtual Assets Regulatory Authority (VARA). Also, the M2 cryptocurrency exchange recently introduced a system that allows UAE residents to convert Dirhams into BTC and ETH directly.
Just last week, the UAE amended its regulation to exempt all crypto transactions from having to pay value-added tax (VAT).
