Tether to develop dirham-pegged stablecoin in UAE

Stablecoin issuer Tether has announced plans to launch a stablecoin pegged to the United Arab Emirates dirham.

Tether Inc., the world’s largest stablecoin issuer, announced on August 21 that the new stablecoin will be launched in collaboration with UAE-based technology giant Phoenix Group PLC and Green Acorn Investments Ltd.

While no exact timeline for launch has been disclosed, the new asset will be backed by liquid UAE-based reserves at a 1:1 ratio and will be issued under the Payment Token Services Regulation introduced by the Central Bank of the UAE in June. Tether will seek licensing under this framework to ensure compliance, the press release reads.

According to the announcement, Dubai has witnessed a surge in cryptocurrency usage since the establishment of the Virtual Asset Regulatory Authority in 2022. The independent regulatory body, called VARA, oversees the licensing, regulation, and governance of the cryptocurrency sector.

Tether expects the new stablecoin to function as a cost-effective alternative to leverage the “benefits of the AED” by facilitating international trade and money transfers, while also acting as a “hedge against currency fluctuations.”

Tether CEO Paolo Ardoino expects the stablecoin to become an “essential tool” for businesses and individuals looking for a “safe and efficient way to transact” via dhiram.

“The United Arab Emirates is becoming a major global economic hub and we believe our users will find our Dirham-pegged token to be a valuable and versatile addition.”

Paolo Ardoino

The upcoming stablecoin is set to join other fiat-pegged stablecoins developed by Tether over the years. In 2020, the stablecoin issuer launched euro-backed stablecoin EURT and two years later introduced the Chinese yuan-backed CNHT.

But Tether’s flagship asset (USDT) remains the world’s largest stablecoin with a market cap of over $117 billion, equating to a market share of almost 70%.

Despite being the market leader, Tether has been criticized for possible misuse of USDT by organizations facing sanctions and other illicit uses. To address these concerns, Tether has partnered with blockchain analytics firm Chainalysis to audit USDT transactions on the secondary market.