UAE Launches Dirham-Backed Stablecoin, Is USD Dominance Under Threat?

Abu Dhabi is moving closer to becoming a global fintech leader. Three major UAE organizations, International Holding Company (IHC), ADQ, and First Abu Dhabi Bank (FAB), have come together to launch a brand-new stablecoin backed by the UAE Dirham.

However, Abu Dhabi’s ambitious plan challenges the dominance of US dollar-backed stablecoins, as other countries also look to create their national alternatives.

A Stablecoin Built on UAE Technology

The stablecoin will be issued on the ADI blockchain, a homegrown technology. The goal is to make payments safe and easy for people, businesses, and organizations, both in the UAE and worldwide.

This stablecoin will help with everyday payments and more complex digital transactions. Since it’s backed by the local currency and follows the Central Bank’s rules, it will be safe and legal.

FAB will be responsible for issuing the stablecoin once it receives regulatory approval from the Central Bank. This partnership brings together strong financial backing, advanced technology, and solid regulatory support—an ideal mix for a successful digital currency launch.

UAE Going Beyond Payments

This stablecoin isn’t limited to basic transactions. It’s also designed for next-generation applications, including payments between machines and systems powered by artificial intelligence.

The goal is to support emerging areas like smart finance and the Internet of Things (IoT), helping the UAE lead in sectors where digital transformation is moving quickly.

Pushing UAE’s Fintech Vision

This step is part of the UAE’s larger goal to be a leader in digital finance. Last year, the country introduced its first official stablecoin, AE Coin. Recently, a local company, MGX, invested $2 billion in Binance, proving how committed the region is to crypto and blockchain.

Syed Basar Shueb, CEO of IHC, said the new stablecoin is an important step for digital finance. He is proud that IHC is using its blockchain skills in the project and that the partnership shows the UAE’s focus on leading digital currencies.

Even Mohamed Hassan Alsuwaidi, CEO of ADQ, believes this project will make the UAE’s digital systems stronger.

A Global Race for National Stablecoins

While the UAE moves forward, other countries are also exploring stablecoins backed by their national currencies. Russia, for example, is considering launching a ruble-backed stablecoin in response to sanctions from the United States.

Globally, many governments are looking into central bank digital currencies (CBDCs) or stablecoins as part of their future financial strategies.

Still, US dollar-backed stablecoins continue to dominate the market. A recent report from Citigroup shows that Tether (USDT) holds a massive 90% share of the $230 billion stablecoin market – a 54% increase from the previous year.