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Stablecoin issuer Tether has disclosed plans to launch a stablecoin pegged to the United Arab Emirates dirham.
In an Aug. 21 announcement, the world’s largest stablecoin issuer Tether Inc. said the new stablecoin would be launched in collaboration with Phoenix Group PLC, a UAE-based tech giant, and Green Acorn Investments Ltd.
While the exact timeline for the launch wasn’t disclosed, the new asset will be backed 1:1 by liquid UAE-based reserves and issued under the Payment Token Services Regulation introduced by the Central Bank of 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 use since the establishment of the Virtual Asset Regulatory Authority in 2022. Dubbed VARA, the independent regulatory body oversees the licensing, regulation, and governance of the cryptocurrency sector.
Tether expects the new stablecoin to function as a cost-effective alternative to reap the “benefits of the AED” by facilitating international trade and remittances while also acting as a “hedge against currency fluctuations.”
Paolo Ardoino, CEO of Tether, expects the stablecoin to become an “essential tool” for businesses and individuals looking for a “secure and efficient means of transacting” via the dhiram.
“The United Arab Emirates 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.”
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 EURT, the euro-backed stablecoin, and two years later introduced the Chinese yuan-backed CNHT.
However, Tether’s flagship asset, (USDT), remains the largest stablecoin in the world, with a market capitalization of over $117 billion, translating to an almost 70% market share.
Despite being a market leader, Tether has been criticized for possible misuse of USDT by entities facing sanctions and other illicit uses. To address these concerns, Tether partnered with blockchain analytics firm Chainalysis in a bid to oversee USDT transactions in the secondary market.