Tether, a leading cryptocurrency company, announced on Wednesday the launch of a new stablecoin pegged to the UAE dirham (AED). The initiative aims to meet the growing demand for the Gulf currency and offer an alternative to the US dollar in global digital transactions.
Characteristics of Stablecoin Anchored to the Dirham
Stablecoins are digital tokens designed to maintain a constant value, backed by traditional currencies such as the US dollar or the euro. These tokens can be used as a form of payment or to exchange other tokens, such as bitcoin, on cryptocurrency exchange platforms. Tether, already known for its USDT token pegged to the dollar, will expand its offering with a stablecoin backed by the UAE dirham. Paolo Ardoino, CEO of Tether, said at an event in Dubai that the main objective is to create an alternative option to the US dollar, highlighting the dirham’s potential as a preferred currency in the context of evolving global trade. Ardoino emphasised the growing interest in holding AED outside the UAE due to the stability and security offered by the country and its sound financial situation. The stablecoin will be ‘fully backed’ by UAE-based liquid reserves, according to the joint statement by Tether and Phoenix Group.
Collaboration with Phoenix Group and Green Acorn Investment
The launch of the stablecoin will take place in collaboration with Phoenix Group, an Abu Dhabi-listed conglomerate specialising in cryptomining and blockchain. The project will also receive support from Green Acorn Investment, an investment company. However, the exact launch date has not yet been announced. Ardoino pointed out that the licensing process by the UAE Central Bank will take a few months. It will also be interesting to see who will be the certifying body for the collateral assets needed for the stable coin.
