Cryptocurrency firm Tether announced on Wednesday its plans to introduce a new stablecoin pegged to the United Arab Emirates dirham.
This move aims to capitalize on growing interest in the Gulf currency and to provide an alternative to the U.S. dollar.
Stablecoins are digital tokens designed to maintain a stable value by being backed by traditional currencies like the U.S. dollar or euro. They have seen significant growth as both payment methods and trading tools, allowing users to buy and sell cryptocurrencies such as bitcoin outside of conventional banking systems.
Tether, which manages the largest stablecoin globally with its dollar-pegged token (USDT), is set to introduce this new dirham-pegged unit to diversify away from the U.S. dollar. With approximately $117 billion in USDT circulation, Tether’s dollar-pegged stablecoin dominates the $169 billion stablecoin market, according to CoinGecko data.
“The main goal is to provide an alternative to the U.S. dollar,” Tether CEO Paolo Ardoino said during an event in Dubai. He expressed confidence that the dirham would become a preferred currency as global trade evolves. Ardoino also noted strong interest in holding UAE dirhams outside the UAE due to the country’s stability and robust financial standing.
The UAE dirham is currently pegged to the U.S. dollar, and the country is working to establish itself as a global cryptocurrency hub. The UAE has rapidly embraced cryptocurrency payments in sectors like real estate and education, enhancing adoption and transaction volumes while developing regulatory frameworks in Abu Dhabi and Dubai.
Tether’s new stablecoin will be fully backed by liquid reserves based in the UAE. The launch will be in partnership with Abu Dhabi-listed cryptomining and blockchain firm Phoenix Group and supported by investment firm Green Acorn Investment. The stablecoin is intended to streamline international trade and remittances, reduce transaction fees, and offer a hedge against currency fluctuations.
The exact launch date has not been provided, but Ardoino indicated that regulatory approval from the UAE Central Bank could take a few months. Additionally, Phoenix Group Co-founder and CEO Seyed Mohammad Alizadehfard mentioned that the blockchain platform for the stablecoin has yet to be selected.
Tether also offers stablecoins pegged to the euro, Chinese yuan, Mexican peso, and gold. As the adoption of cryptocurrencies grows, regulators remain concerned about the risks associated with stablecoin reserves and their potential impact on the broader financial system.
