Abu Dhabi launches new Dirham-backed stablecoin project, backed by major institutions

Abu Dhabi’s International Holding Company, ADQ, and First Abu Dhabi Bank announced plans to launch a dirham-backed stablecoin, fully regulated by the UAE Central Bank, aimed at advancing payment solutions and digital infrastructure.

The stablecoin will operate on the ADI blockchain, according to The National, and will be issued by FAB, the UAE’s largest bank, pending regulatory approval, the companies said in a joint statement Monday. 

The digital currency will be used by consumers, businesses, and institutions, supporting emerging applications like machine-to-machine transactions and artificial intelligence-driven processes.

“This new stablecoin represents a transformative step forward and will revolutionise the way both consumers and businesses engage with trusted blockchain payments in the UAE,” said Hana Al Rostamani, group chief executive of FAB.

Stablecoins, typically pegged to fiat currencies, offer a more stable digital asset compared to cryptocurrencies like Bitcoin. Their value is anchored to currencies, government treasuries, or commodities such as gold, providing a less volatile alternative for digital transactions.

‘Digital Dirham’

The UAE Central Bank has been moving quickly to advance its digital currency strategy. In March 2023, it launched the “Digital Dirham” initiative. 

Last year, the bank introduced regulations for stablecoins, aiming to create a clear operational framework for the sector. To reinforce this strategy, the central bank recently unveiled a new symbol for the digital dirham.

Mohamed Alsuwaidi, Managing Director and Group CEO of ADQ, said the launch marks “a pivotal step” in strengthening the UAE’s digital infrastructure. 

“As we move towards an increasingly digital and connected economy, the stablecoin will provide a solution that is secure, efficient and scalable,” Alsuwaidi said.

The ADI blockchain, developed by the ADI Foundation, will serve as the backbone for the new stablecoin. The foundation has established partnerships with governments in over 20 countries to expand its compliant blockchain distribution network.

The UAE has been building momentum in the digital asset space. The Abu Dhabi Global Market and Dubai’s Virtual Assets Regulatory Authority have already implemented frameworks for regulating cryptocurrencies. 

In December, AE Coin became the first regulated digital currency approved in the UAE. Meanwhile, Tether, issuer of USDT (USDT) — the world’s largest stablecoin — also received approval last August to develop a stablecoin in the region.

The new dirham-backed stablecoin is expected to have a “significant impact” across finance, commerce, and trade, the companies said.