UAE's Clear Path Forward: Dollar and Dirham Stablecoins to Coexist
The United Arab Emirates (UAE) is emerging as a leader in the stablecoin market due to its clear regulations, institutional support, and a plan to use both dollar- and dirham-backed stablecoins.
Mohammad Nikkar of Arthur D. Little attributes this success to three key factors: early introduction of stablecoin regulations, a system that allows both dollar and dirham stablecoins to coexist, and large financial institutions supporting stablecoins from the beginning.
The UAE introduced its Central Bank framework for fiat-backed tokens in June 2024, providing companies with clear rules before the market became more developed. This framework enables companies to use dollar-backed stablecoins like USDC and RLUSD for international payments, while dirham-backed stablecoins can be used for domestic transactions.
Nikkar expects stablecoins to first gain traction among businesses and financial institutions rather than everyday consumers. The initial major uses will involve institutional payments, cross-border trade, and remittances, particularly between the UAE, Gulf countries, Africa, and South Asia.