Tether Announces Plans for UAE Dirham-Pegged Stablecoin

Stablecoin issuer Tether has revealed it plans to develop a new stablecoin pegged to the United Arab Emirates Dirham (AED).

Calling the UAE a “significant global economic hub,” Tether CEO Paolo Ardoino said in a statement shared with Decrypt that the new stablecoin is aimed at “businesses and individuals looking for a secure and efficient means of transacting in the United Arab Emirates Dirham,” including cross-border payments, trading and diversification of assets.

In its press release, the firm outlined plans to collaborate on the as-yet-unnamed stablecoin’s launch with UAE-based tech conglomerate Phoenix Group PLC and Green Acorn Investments Ltd.

The proposed Dirham-pegged token will join Tether’s existing lineup of stablecoins, which includes those pegged to the US Dollar, Euro, Chinese Yuan, and Mexican Peso.

Ardoino said that the new stablecoin aims to provide users with a means of accessing the benefits of the AED while utilizing blockchain technology, with Tether claiming that the digital asset could potentially streamline international trade and remittances, reduce transaction fees, and offer a hedge against currency fluctuations.

The UAE and crypto

The initiative comes as the UAE continues to position itself as a hub for cryptocurrency and blockchain innovation.

Since 2022, the country has seen a surge in crypto investment, partly attributed to the establishment of the Virtual Asset Regulatory Authority in Dubai. In 2023, Coinbase CEO Brian Armstrong praised the country’s “forward thinking” approach to digital assets, while crypto exchange Binance identified the region as a “focal point” for the crypto industry.

Phoenix Group’s Co-Founder and Group CEO, Seyedmohammad Alizadehfard, expressed optimism about the collaboration, highlighting Abu Dhabi’s progressive stance towards blockchain and digital assets.

According to the company, each token will be fully backed by liquid UAE-based reserves in line with its existing standards, which have previously faced scrutiny. Tether has yet to receive an audit from one of the Big Four accounting firms, Deloitte, PwC, EY and KPMG, which Ardoino has stated is a “top priority” for the firm.

The global stablecoin market is currently valued at $150 billion, with projections suggesting potential growth to $2.8 trillion by 2028. Tether’s USDT stablecoin, the largest by market share,  currently has a reported market cap of over $117 billion per data from CoinGecko.