Acknowledgement as an Official Virtual Asset
Tether’s USDt stablecoin has been formally acknowledged as an Accepted Virtual Asset (AVA) by the Abu Dhabi Global Market (ADGM). This approval opens the way for regulated activities in the vibrant financial sector of the region by permitting licensed enterprises under ADGM’s jurisdiction to offer services including the use of USDt.
Increasing the Compatibility of Blockchain
With a market valuation of over $138 billion, Tether’s USDt is the biggest stablecoin in the world and is now authorised for usage on several well-known blockchains, such as Ethereum, Solana, and Avalanche. This cross-platform compatibility highlights USDt’s adaptability and increasing use in various blockchain environments.
Dirham-Pegged Stablecoin Initiative by Tether
Tether has teamed up with regional companies Phoenix Group and Green Acorn Investments to launch a dirham-pegged stablecoin in an effort to increase its presence in the United Arab Emirates. Tether’s position as the biggest stablecoin issuer by market capitalisation will be strengthened by this new addition, which will supplement its current suite of fiat-pegged tokens, which already includes USDT and EURT.
Openness and Reserve Administration
Tether, which is owned by Ifinex, a company based in Hong Kong, keeps things transparent by disclosing all of its reserves in full. In order to maintain transparency and trust in its operations, the corporation also makes available a comprehensive list of reserve custodians.
UAE: A Crypto-Friendly Centre for Regulation
Drawing in International Crypto Players
Major firms in the cryptocurrency business have been enticed to the UAE by its progressive regulatory environment. For instance, OKX has introduced a trading platform that allows qualified institutional investors to trade derivatives. The product is available to both retail and institutional clients. Furthermore, a mechanism that allows locals to transfer dirhams straight into Bitcoin (BTC) and Ether (ETH) has been introduced by the cryptocurrency exchange M2.
Approval of AED Stablecoin in Principle
Parallel to this, the AED Stablecoin has received in-principle clearance from the UAE Central Bank in accordance with its Payment Token Service Regulation framework. As a result, AED Stablecoin is in a strong position to become the UAE’s first regulated dirham-pegged stablecoin.
Fulfilling Regulatory Requirements
Restrictions on Cryptocurrency Payments
As stated in the Central Bank of the UAE’s licensing framework, worries over limitations on cryptocurrency payments are allayed by the approval of dirham-pegged stablecoins. These regulations forbid using cryptocurrency to make payments unless authorised dirham-pegged tokens are used.
Possible Applications for AE Coin
AED Stablecoin’s AE Coin has the potential to be a key component of the UAE’s cryptocurrency ecosystem if it is authorised in full. It may allow merchants to accept it for products and services and function as a local cryptocurrency trading pair on exchanges and decentralised platforms.
Requirements for Stablecoin Reserves
According to CBUAE legislation, stablecoin issuers must completely back their tokens with dirham-denominated currency kept in escrow at UAE banks. If the average duration is less than six months, issuers may also choose to allocate 50% of reserves as cash and invest the remaining amount in UAE government bonds and monetary bills.
An important turning point in the uptake and growth of stablecoins has been reached with Tether’s introduction into the regulated cryptocurrency market in the United Arab Emirates. When combined with the UAE’s forward-thinking approach to cryptocurrency regulation, this achievement establishes the region as a global leader in financial services and digital asset innovation.
