Tether, the issuer of the USDT stablecoin, announced its partnership with Phoenix Group and Green Acorn Investments to develop a new stablecoin pegged to the United Arab Emirates Dirham (AED). The initiative aims to “lead the way” in obtaining licenses under the country’s new regulatory framework and facilitate transactions.

Tether Unveils UAE Dirham-Pegged Stablecoin

Tether revealed its plan to develop and launch a “digital representation” of the United Arab Emirates Dirham. Liquid reserves based on the UAE will fully underpin the upcoming stablecoin to ensure that “each Dirham-pegged token is linked to the value of the AED, providing stability and confidence in its value.”

Tether announces new Dirham-pegged Stablecoin. Source: Tether on X

The Dirham-pegged stablecoin will be added to the company’s suite of products to provide users with “seamless and cost-effective” ways to access the benefits of the AED, while leveraging the transparency and efficiency of blockchain technology.

Tether will partner with UAE-based multibillion-dollar Phoenix Group and will be backed by investment from Green Acorn to develop the stablecoin. The new digital asset will streamline international trade and remittances in the area.

Furthermore, it aims to play a crucial role in the UAE’s financial ecosystem by lowering transaction fees and protecting users from currency fluctuations. In the announcement, Tether CEO Paolo Ardoino expressed his excitement about the new stablecoin product:

We are excited to announce this initiative to develop Tether’s Dirham-pegged stablecoin, which complements our suite of stablecoin options. The UAE is becoming a major global economic hub and we believe our users will find our Dirham-pegged token to be a valuable and versatile addition. Tether’s Dirham-pegged stablecoin will become an essential tool for businesses and individuals looking for a secure and efficient way to transact in the UAE Dirham, whether for cross-border payments, trading, or simply diversifying one’s digital assets.

New Regulation for Payment Token Services in the UAE

Seyed Mohammad Alizadehfard, co-founder and CEO of Phoenix Group, stressed his confidence in the potential of the dirham-pegged stablecoin to transform the digital economy in the region and beyond.

The CEO highlighted Abu Dabhi’s “progressive stance on blockchain, digital assets and innovation,” making it the “perfect launchpad” for the product. According to the announcement, the companies will “take the lead in obtaining licenses” under the UAE Central Bank’s (CBUAE) new Payment Token Services Regulation (PTRS).

The CBUAE recently unveiled its new regulatory framework for stablecoin-related services in the UAE. Under the new PTRS guidelines, businesses and suppliers in the Emirates will not be able to accept crypto payments for goods and services unless it is a Dirham-backed payment token.

Additionally, Foreign Payment Token Issuers must register with the Central Bank and keep 100% of asset reserves in cash in escrow. The CBUAE also provided a one-year transition period ending in June 2025 during which the PTRS will not be implemented, allowing companies to comply with the new regulations.

It is worth noting that the new regulation will not apply in financial zones such as the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM). However, the PTSR will apply to entities that are already licensed by the Virtual Asset Regulatory Authority (VARA).

Total crypto market cap sits at $2.049 trillion in the weekly chart. Source: TOTAL on TradingView

Main image from Unsplash.com, chart from TradingView.com