Ripple is preparing for the potential launch of a dirham-backed stablecoin in the UAE as the country strengthens its digital finance regulatory environment.
The Central Bank of the UAE (CBUAE) recently introduced a framework supporting dirham-backed and other currency-backed stablecoins, aiming to integrate stablecoins into the UAE’s financial systems and payments infrastructure.
This regulatory development aligns with the UAE’s ambition to position itself as a leader in digital assets. Ripple’s longstanding presence in the region makes it a key player in the emerging market.
In its announcement on Nov.8, Ripple emphasized the UAE’s proactive approach to stablecoin regulation, noting, “The UAE has distinguished itself as a global hub for progressive digital asset regulation, creating a fertile environment for blockchain innovation.”
The blockchain’s potential dirham-backed stablecoin would contribute to this vision, supporting efficient regional digital transactions while avoiding currency fluctuation issues.
Projected to reach $3T in the next five years, stablecoins are driving a new era of digital finance. The UAE’s forward-thinking regulations for dirham-backed and global stablecoins solidify its role as a leader in the digital economy. https://t.co/tX7QJZ0RVC
— Ripple (@Ripple) November 8, 2024
Ripple Leverages UAE Framework for Dirham-Backed Stablecoin Initiatives
The UAE’s framework allows for the issue and use of AED-backed stablecoins for payments. In contrast, stablecoins tied to other currencies can be registered for virtual asset transactions within set guidelines.
CBUAE’s approach includes specific measures to manage risks such as market volatility and liquidity, contributing to a safer financial environment for stablecoin integration.
Ripple, previously partnered with the National Bank of Abu Dhabi to facilitate remittance solutions, is positioned to leverage these regulatory provisions for its stablecoin initiatives.
The new framework contrasts with regulatory approaches in other regions. While the UAE allows stablecoins pegged to non-AED currencies for virtual asset payments, Europe’s Markets in Crypto-Assets (MiCA) regulation limits the daily transactions of stablecoins backed by non-EU currencies.
Ripple’s involvement with a dirham-backed stablecoin could make it a unique player in the UAE. The stablecoin’s regional backing may offer advantages for financial institutions and businesses handling cross-border transactions.
