Abu Dhabi’s biggest financial players are teaming up to launch a new dirham-backed stablecoin. Sovereign fund ADQ, the UAE’s largest bank, First Abu Dhabi Bank (FAB), and international conglomerate International Holding Company announced their plans on April 28, pending regulatory approval.
According to a statement from the companies, the stablecoin will be regulated by the UAE Central Bank and backed by the country’s national currency, the dirham. There is a particular focus on supporting interoperability between devices and the application of artificial intelligence.
“Our goal is to bring the UAE to the forefront of global blockchain innovation and strengthen the country’s digital infrastructure,” ADQ officials said.
Stablecoin on the ADI platform
If approved by regulators, the new stablecoin will operate on the ADI blockchain developed by the ADI Foundation, a non-profit organization that helps traditional financial systems and governments adopt blockchain technology.
The ADQ Foundation, founded in 2018, is a sovereign wealth fund focusing on critical infrastructure and global supply chains. IHC is one of the UAE’s largest investment companies, with a market value exceeding $243 billion, and ties to Abu Dhabi’s ruling family. FAB is the UAE’s largest bank, formed in 2017 through the merger of First Gulf Bank and National Bank of Abu Dhabi.
Related: USDC vs USDT: Which Stablecoin Is Better?
Global competition with dollar-denominated stablecoins
The UAE’s desire to create its own stablecoins reflects a worldwide trend. A host of countries have announced plans to launch stablecoins backed by currencies other than the U.S. dollar.
The market capitalization of dollar-backed stablecoins surpassed $230 billion in April, up 54% from a year ago, with Tether leading the way.
Despite the growing interest in national stablecoins, investment bank Citigroup predicts in a report dated April 23 that the vast majority of stablecoins will still be pegged to the U.S. dollar in the near future, while countries outside the U.S. are expected to promote national central bank digital currencies.
Source:: UAE Giants Unite to Launch Dirham Stablecoin, Challenging the US Dollar