AED Stablecoin has received in-principle approval in the UAE for its AE Coin as Tether’s entry into the UAE’s crypto market looms.
AED Stablecoin, a UAE-based company, has received in-principle approval from the Central Bank of the United Arab Emirates (CBUAE). The firm’s stablecoin issuance will comply with the region’s Payment Token Service Regulation rules.
According to a press release issued by AED Stablecoin, its AE Coin is the first dirham-pegged stablecoin to be offered in the UAE. The approval follows the UAE’s stablecoin framework implementation, which prohibits crypto-related payment tokens unless they are pegged to the country’s national currency. The regulations also prevent algorithmic stablecoins.
AED Stablecoin’s in-principle approval puts it one step away from full approval, which, if secured, will allow regulated exchanges in the region to use AE Coin in trading pairs with other cryptocurrencies. As the UAE banned stablecoins pegged to other currencies, crypto firms, especially exchanges, worried about their operations since volatile crypto assets are often presented with stablecoins as trading pairs. Full approval will also enable AE Coin to act as a medium for merchant payments to acquire goods and services.
“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,” said Ramez Rafeek, General Manager of AED Stablecoin. “As the first-ever stablecoin regulated by the Central Bank of the UAE, AE Coin will be revolutionizing the digital currency landscape, providing users with an unparalleled blend of financial freedom, unwavering stability, and top-tier security.”
The UAE’s stablecoin regulations dictate that issuers, while backing their stablecoins in dirhams, must deposit the needed amounts in escrows with local banks. Furthermore, they must maintain 50% of their reserves in cash, while the rest can be maintained in UAE government bonds and CBUAE Monetary Bills for an average of six months.
Tether Will Soon Launch a Dirham-Backed Stablecoin Soon
AED Stablecoin is expected to compete with Tether, the issuer behind USDT—the biggest stablecoin by market capitalization, soon. Tether has partnered with Phoenix Group and Acorn Investments, two UAE-based firms, to bring its dirham-pegged stablecoin. The partnerships will let Tether access the dirham liquidity needed to back its offering.
Tether’s planned move to offer a dirham-pegged stablecoin comes from the currency’s rising dominance in global trade as its holdings outside the UAE are growing tremendously. “We see a lot of interest in holding AED outside of the UAE,” said Tether CEO Paolo Ardoino at an event in August.
