Nikolas Sargeant
The Central Bank of the United Arab Emirates (CBUAE) has granted in-principle approval to AED Stablecoin on October 14, paving the way for the issuance of the first fully regulated dirham-pegged stablecoin in the region.
This development aligns with the UAE's Digital Government Strategy 2025 and falls under the CBUAE's newly established Payment Token Service Regulation framework.
Navigating Regulatory Waters: AE Coin's Path to Launch
While this preliminary approval is a crucial step, AED Stablecoin must still navigate stringent regulations before full implementation. The CBUAE's licensing framework mandates that stablecoins be fully cash-backed, prohibiting algorithmic stablecoins and privacy tokens. Issuers must maintain reserves in dirhams within UAE banks or invest in secure options like UAE government bonds.
If fully approved, AE Coin aims to function as both a local trading pair and a widely accepted payment method for everyday transactions within the UAE, potentially simplifying digital asset engagement for residents and traders.
Shaping Dubai's Crypto Landscape: VARA's Role in Regulation
Concurrent with these developments, Dubai's Virtual Assets Regulatory Authority (VARA) has been actively shaping the emirate's crypto landscape. VARA recently mandated that companies promoting virtual asset investments include disclaimers about value fluctuations in their marketing materials. The authority has also taken enforcement actions, fining seven businesses for regulatory violations and operating without proper licenses.
These regulatory measures, including the approval of AED Stablecoin, position the UAE to compete in the global stablecoin market while ensuring responsible service delivery and enhancing trust in the local crypto ecosystem.
