Tether announced a partnership with a number of UAE-based companies to develop and issue a stablecoin pegged to the UAE dirham (AED). The new asset will facilitate international trade and reduce cross-border payment fees.
Tether, the issuer of the largest stablecoin by market cap, announced a partnership with Phoenix Group PLC, an Abu Dhabi-based technology conglomerate, and Green Acorn Investments Ltd, a UAE-based investment company. The partnership includes the launch of a new stablecoin pegged to the dirham, the national currency of the United Arab Emirates.
The new stablecoin will be fully backed by UAE-based liquid reserves. The initiative aims to create a digital analog of the dirham whose stability will be guaranteed by Tether’s rigorous reserve backing standards.
According to Paolo Ardoino, CEO of Tether, the initiative not only aims to expand the range of assets available on Tether but will also allow the UAE users to access easy and cheap cross-border transfers. He also assured that the new stablecoin will reduce transaction costs and provide volatility protection for local crypto market participants.
Tether’s interest in the UAE market is quite reasonable as the region is a major economic hub. Local authorities are actively supporting cryptocurrency initiatives and trying to bring clarity to stablecoin sector regulation. For example, the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM) proposed a new standard for the regulation of tokens pegged to fiat-referenced tokens (FRT). The initiative is to improve control over the issuance of such assets and introduce standards to maintain their stability. The main requirements of the regulator include the provision of liquid assets and compliance with strict operational standards.
The Central Bank of the United Arab Emirates (CBUAE) recently decided that only issuers of stablecoins pegged to dirhams will obtain the local license. In turn, Tether recently introduced a new digital asset, the synthetic dollar Alloy (aUSDT) backed by gold.
