Tether to Launch Dirham-Pegged Stablecoin to Meet Gulf Demand
DUBAI, Aug 21 (Reuters) – Tether announced on Wednesday its plan to introduce a new stablecoin pegged to the United Arab Emirates (UAE) dirham. This move aims to address the rising demand for Gulf currencies and offer an alternative to the U.S. dollar.
Stablecoins, digital tokens designed to maintain a stable value through backing by traditional currencies like the U.S. dollar or euro, have surged in popularity. They are widely used for payments and trading cryptocurrencies outside of regulated financial systems.
Currently, Tether leads the stablecoin market with its dollar-pegged token (USDT), which maintains a value of $1 and constitutes a significant portion of the $169 billion stablecoin market, with around $117 billion in circulation, according to CoinGecko.
Tether CEO Paolo Ardoino explained that the new dirham-pegged stablecoin aims to offer an alternative to the U.S. dollar. Ardoino anticipates growing preference for the dirham as global trade dynamics shift, noting considerable interest in holding AED (dirham) outside the UAE due to the country’s stability and financial strength.
The UAE’s dirham is currently pegged to the U.S. dollar. The country is actively positioning itself as a global cryptocurrency hub, promoting crypto payments in sectors like real estate and education, and developing regulatory frameworks in Abu Dhabi and Dubai.
Tether’s new stablecoin, backed by liquid UAE-based reserves, will be launched in collaboration with Abu Dhabi-listed Phoenix Group and with support from Green Acorn Investment. The stablecoin is expected to facilitate international trade and remittances, lower transaction fees, and offer a hedge against currency fluctuations.
The launch date is yet to be announced, with Ardoino noting that obtaining licensing from the UAE Central Bank may take several months. Phoenix Group Co-founder and CEO Seyed Mohammad Alizadehfard also indicated that the blockchain platform for the stablecoin has not yet been selected.
Featured image from: cointelegraph.com