Abu Dhabi's Phoenix Group partners with Tether to launch UAE dirham-pegged stablecoin

The global market for stablecoins is currently valued at $150bn and is set to grow exponentially to $2.8tn by 2028.

Abu Dhabi-based Phoenix Group has joined forces with cryptocurrency firm Tether to launch a stablecoin pegged to the UAE dirham, catering to the surging demand for the Gulf currency and offering an alternative to the US dollar.

The global market for stablecoins currently stands at a massive $150 billion and is projected to grow exponentially, reaching an impressive $2.8 trillion by 2028. The launch of the dirham-pegged stablecoin marks a significant development in the digital assets landscape, providing a stable, reliable and secure digital currency.

In a joint statement, Phoenix and Tether announced that the dirham stable coin will be available globally and “fully backed” by liquid UAE-based reserves. The stablecoin aims to “streamline international trade and remittances, reduce transaction fees, and provide a hedge against currency fluctuations”.

Catering to a diverse range of needs, the new stablecoin will bridge the gap between traditional finance and the digital economy, offering a solution for investors, businesses, and everyday consumers seeking stability in the world of cryptocurrency and digital assets.

“The UAE is becoming a significant global economic hub, and we believe our users will find our dirham-pegged token to be a valuable and versatile addition,” said Paolo Ardoino, CEO of Tether.

“Tether’s dirham-pegged stablecoin is set to become an essential tool for businesses and individuals looking for a secure and efficient means of transacting in the UAE dirham, whether for cross-border payments, trading, or simply diversifying one’s digital assets.”

Phoenix and Tether did not announce a launch date for the UAE dirham-pegged stablecoin.

Stablecoins are digital tokens designed to keep a constant value backed by traditional currencies such as the US dollar or euro. They are typically used to facilitate faster and cheaper transactions in the cryptocurrency market, as well as to hedge against the volatility of cryptocurrencies.

Tether also provides stablecoins pegged to the euro, Chinese yuan, the Mexican peso and gold.

The UAE is one of the fastest-growing cryptocurrency markets in the world, with the Gulf state enabling cryptocurrency payments in areas such as real estate and school fees.

The country has also seen high rates of adoption and transaction volumes for cryptocurrency, and both Abu Dhabi and Dubai have developed virtual asset regulation.