Central Bank of the United Arab Emirates has given preliminary approval for AED Stablecoin. This brings the project closer to being the first stablecoin pegged to the dirham in the UAE.
The CBUAE Payment Token Service Regulation Framework outlines licensing requirements specific to digital tokens.
AED Stablecoin has been approved in principle, which makes it a key player on the evolving UAE crypto market. Regulatory clarity is deemed essential for the sustainable growth of the industry.
What role does AED Stablecoin play in the UAE crypto market?
AED Stablecoin’s preliminary licence allows it to progress plans for issuing a regulated digital currency backed by dirhams, AE Coin.
The approval of this application is important because it resolves concerns about restrictions placed on crypto-payments, which were raised following CBUAE’s new licensing rules.
Only licensed tokens pegged to dirhams can be used for payment in the UAE. AE Coin, if fully licensed, could be used as a local currency pair for both centralized and uncentralized exchanges. This would allow merchants to use it in transactions involving products and services.
CBUAE’s regulatory position impacts crypto payment in the UAE
CBUAE has tightened up its licensing rules, especially for crypto payments.
Tokens must be licensed and pegged to dirham otherwise they cannot be used for payment.
The UAE digital currency market will be more stable and regulated with this change.
AED Stablecoin’s approval is seen as a step in the right direction towards aligning these expectations with regulatory requirements, and could provide a digital payment solution that is compliant for local users.
What role could AE Coin play in the UAE’s digital financial landscape?
If fully licensed AE Coin will play a key role in the UAE’s digital financial ecosystem.
It could be a safer digital currency for retailers and a more stable alternative to the traditional dirham.
The UAE has a broader goal of developing its digital economy and maintaining standards.
Integration of the coin into cryptocurrency exchanges and platforms may increase the liquidity and support a wider adoption by retail users and institutions.
Tether’s UAE target market is attracting competing interests
AED Stablecoin, however, isn’t the only digital asset backed by the dirham.
Tether is a global leader in stablecoins. It has formed a partnership with Phoenix Group, Green Acorn Investments, and other local companies to launch its version of stablecoins pegged in dirhams.
Source: Cointelegraph
The UAE has a growing number of crypto-related companies.
AED Stablecoin could benefit from the regulatory advantage it has gained with CBUAE’s approval in order to build trust among local users.
As regulatory clarity brings in investments, crypto exchanges are expanding.
Major crypto exchanges have been attracted to the UAE by its regulatory clarity.
OKX has launched an institutional and retail trading platform for the UAE. This was after they secured a license that included permissions to trade derivatives with qualified institutional investors.
Another crypto exchange M2 has also introduced a conversion system that allows dirhams to be converted directly into Bitcoins (BTC) or Ethers (ETH).
The UAE is a centre for innovation in digital assets, and this development highlights the UAE’s attractiveness as an innovator hub.
As new information becomes available, this post Central Bank of the UAE Approves AED Stablecoin preliminary license could be updated.
