Three Big Organizations in Abu Dhabi Are Teaming Up to Create a New Digital Currency Stablecoin

This stablecoin will be tied to the UAE's official currency, the dirham, and overseen by the UAE's central bank to ensure it's safe and legal.

Three large Abu Dhabi organizations are joining forces to create a new digital currency stablecoin in the United Arab Emirates (UAE).

The initiative will see Abu Dhabi holding company ADQ, the nation’s biggest lender First Abu Dhabi Bank (FAB), and investment firm International Holding Co (IHC) collaborate to launch the stablecoin, which will be pegged to the UAE’s official currency and overseen by the UAE’s central bank to ensure it’s used safely and legally.

The organizations are still in the early stages of planning and will require approval from regulators before they can launch the stablecoin.

As part of the initiative, which aims to make digital payments easier and faster for people and businesses in the UAE, the three firms are planning to use blockchain technology and cooperate with the relevant authorities in the UAE to introduce the new digital currency.

The initiative will help the country integrate modern digital money systems. It will also create new possibilities for economic growth in the UAE, a major oil producer and one of the richest nations in the world.

Announcing the move on Monday, FAB said the new digital currency will have a huge impact on several industries. It will bring about a "paradigm shift" in how UAE consumers and businesses use and secure blockchain payments, rendering transactions more seamless and trustworthy.

The statement adds that the stablecoin will be used as a preferred mode of digital currency in a variety of everyday life scenarios. It will also support emerging digital use cases such as machine-to-machine and artificial intelligence (AI).

In December, the UAE’s central bank approved AE Coin, a digital currency that will be pegged to the United Arab Emirates’ currency.

The Gulf countries are increasingly turning to digital currencies. Earlier this year, Saudi Arabia and the UAE announced that they are planning to create a new digital currency that will be used by the six members of the Gulf Cooperation Council (GCC).

The initiative is part of a broader push by Gulf states to adopt new technologies and diversify their economies away from oil.

In August, leading stablecoin provider Tether announced that it will be introducing a stablecoin based on the UAE Dirham (AED).

This will add to Tether’s rapidly expanding presence in the Middle East, as the firm continues to make moves to expand its offerings in key markets around the world.

Earlier this year, Tether signed an agreement with MenaPay, a leading digital payments platform in the Middle East and North Africa (MENA) region, to open up its services to a wider range of users in the region.

Tether is also planning to launch a new stablecoin that will be pegged to the Saudi Riyal (SAR) later this year.

The move by Tether comes amid a broader push by crypto firms to expand their presence in the Middle East, which is a fast-growing market for digital assets.

Crypto exchange Binance is also planning to launch its services in Saudi Arabia and the UAE later this year.

The initiative by ADQ, FAB and IHC will help to further expand the use of digital currencies in the UAE. It will also support the country’s goal of becoming a regional hub for financial technology.