Stablecoin

Token

Bank

United

Phoenix

Update (Oct. 18, 7:55 am UTC): This article was republished by Cointelegraph after confirming the accuracy of the press release concerning AED Stablecoin’s AE Coin in-principle approval from the Central Bank of the United Arab Emirates.
The Central Bank of the United Arab Emirates (CBUAE) has granted in-principle approval to AED Stablecoin under its Payment Token Service Regulation framework, the company said in a press release.
AED Stablecoin’s preliminary license <a data-ct-non-breakable="null" href="https://www.zawya.com/ar/%D8%A7%D9%84%D8%A8%D9%8A%D8%A7%D9%86%D8%A7%D8%AA-%D8%A7%D9%84%D8%B5%D8%AD%D9%81%D9%8A%D8%A9/%D8%A8%D9%8A%D8%A7%D9%86%D8%A7%D8%AA-%D8%A7%D9%84%D8%B4%D8%B1%D9%83%D8%A7%D8%AA/aed-stablecoin-llc-nmn0rfrh" rel="nofollow noopener" target="_blank" text="null" title="https://www.zawya.com/ar/%D8%A7%D9%84%D8%A8%D9%8A%D8%A7%D9%86%D8%A7%D8%AA-%D8%A7%D9%84%D8%B5%D8%AD%D9%81%D9%8A%D8%A9/%D8%A8%D9%8A%D8%A7%D9%86%D8%A7%D8%AA-%D8%A7%D9%84%D8%B4%D8%B1%D9%83%D8%A7%D8%AA/aed-stablecoin-llc-nmn0rfrh">approval</a> makes it a frontrunner in the race to become the first issuer of a regulated dirham-pegged stablecoin in the UAE.
The development eases concerns about <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/uae-crypto-payments-ban" rel="null" target="null" text="null" title="null">potential restrictions on crypto payments</a>, which had arisen following the CBUAE’s <a data-ct-non-breakable="null" href="https://rulebook.centralbank.ae/en/rulebook/payment-token-services-regulation" rel="null" target="null" text="null" title="null">recent release of its licensing framework</a>, which prohibits crypto for payments unless it involves licensed dirham-pegged tokens.
If fully approved, AED Stablecoin’s AE Coin could serve as a local trading pair for cryptocurrencies in exchanges and decentralized platforms, while allowing merchants to accept it for goods and services.&nbsp;
Related: <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/uae-stablecoin-licensing-system" rel="null" target="null" text="null" title="https://cointelegraph.com/news/uae-stablecoin-licensing-system">UAE central bank approves licensing system for stablecoins</a>
The central bank’s licensing framework also bars algorithmic stablecoins and privacy tokens, favoring fully cash-backed assets.
Issuers are required to back their stablecoins with cash in a separate escrow fully denominated in dirhams within a UAE bank.&nbsp;
Alternatively, they may <a data-ct-non-breakable="null" href="https://rulebook.centralbank.ae/en/rulebook/article-22-management-and-safekeeping-reserve-assets" rel="nofollow noopener" target="_blank" text="null" title="https://rulebook.centralbank.ae/en/rulebook/article-22-management-and-safekeeping-reserve-assets">hold</a> at least 50% of reserve assets as cash, with the remaining portion invested in UAE government bonds and CBUAE Monetary Bills with an average duration of up to six months.
<h2 id="uae-s-crypto-red-carpet">UAE’s crypto red carpet</h2>
AED Stablecoin is expected to <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/tether-reports-record-breaking-profit-q2" rel="null" target="null" text="null" title="null">face competition from Tether</a>, the issuer of the world’s largest stablecoin by market capitalization, USDt (<a data-ct-non-breakable="null" href="https://cointelegraph.com/tether-price-index" rel="null" target="null" text="null" title="null">USDT</a>).
<figure>
 <img alt="UAE, Law, Payments, Tether, Stablecoin" src="https://s3.cointelegraph.com/uploads/2024-10/01928a8d-0daa-7bd6-83bf-eab84717d6a9" title="">
 <figcaption style="text-align: center;">
 Tether’s USDT leads all stablecoins as it nears $120 billion market capitalization. Source: CoinGecko
 </figcaption>
</figure>
Tether recently said that it has <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/tether-aed-stablecoin-uae-partners-launch" rel="null" target="null" text="null" title="null">partnered with local firms</a> Phoenix Group and Green Acorn Investments to introduce its own dirham-pegged stablecoin.
Related: <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/m2-exchange-uae-aed-to-crypto" rel="null" target="null" text="null" title="null">UAE exempts crypto transfers, conversion from value-added tax</a>
Meanwhile, the UAE’s crypto-friendly regulatory environment has been attracting major players.&nbsp;
OKX recently launched a retail and institutional trading platform in the UAE after obtaining a full license, which includes derivatives trading for qualified institutional investors.&nbsp;
Additionally, crypto exchange M2 has opened a new system <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/m2-exchange-uae-aed-to-crypto" rel="null" target="null" text="null" title="null">that allows residents to directly convert dirhams</a> into Bitcoin (<a data-ct-non-breakable="null" href="https://cointelegraph.com/bitcoin-price" rel="null" target="null" text="null" title="null">BTC</a>) and Ether (<a data-ct-non-breakable="null" href="https://cointelegraph.com/ethereum-price" rel="null" target="null" text="null" title="null">ETH</a>).
Magazine: <a data-ct-non-breakable="null" href="https://cointelegraph.com/magazine/defi-bots-pumping-solana-stablecoin-volume/" rel="" target="_self" text="null" title="https://cointelegraph.com/magazine/defi-bots-pumping-solana-stablecoin-volume/">The DeFi bots pumping Solana’s stablecoin volume</a><a data-ct-non-breakable="null" href="https://cointelegraph.com/magazine/defi-bots-pumping-solana-stablecoin-volume/" rel="" target="_self" text="null" title="https://cointelegraph.com/magazine/defi-bots-pumping-solana-stablecoin-volume/"> </a>

UAE stablecoin issuer gets nod from central bank

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