Following the approval of stablecoins by the United Arab Emirates Government, fiat-based stablecoin issuer Tether has partnered with Reelly Tech to enhance its presence in the Middle East. Meanwhile, UAE’s native stablecoin AED has witnessed a surge in its usage.
The rise of stablecoins other than USD-based tokens has created concerns over the digital economic hegemony of America. Meanwhile, firms like Tether try to keep the dominance of the US dollar internationally and aid millions of people around the world looking for alternatives to their native currencies.
This article will delve into a brief account of UAE’s AE Coin, and check its futuristic potential. Also, we will analyze how it will create an impact on the dominance of the US Dollar. Without further ado, let’s get started.
What is AE Coin? An Overview
AE Coin is a blockchain-based stablecoin pegged into the United Arab Emirates dirham (AED). Final approval given by UAE’s Central Bank (CBUAE) in December 2024, it is UAE’s first fully regulated stablecoin. Stablecoin providers can issue the token by acquiring a license.
A licensed issuer should meet certain requirements like holding the pegged fiat in a dedicated UAE-licensed bank account. Similar to other stablecoins such as USDT and USDC, the AED coin will be audited monthly to ensure that it is backed by fiat AED reserve.
Why the UAE’s Approval is Making Headlines?
Since World War II, the US Dollar has been the leading reserve currency of the world. This dominance has spread over the cryptocurrency realm from its initial days. Last year, the BRICS countries decided to create a cross-border payment system and mint a new currency, which will directly impact the US Dollar.
UAE has been a full member of BRICS since January 2024, and we will possibly see the emergence of blockchain AED in favor of BRICS. The approval stablecoin ecosystem of UAE is a milestone because of its power to enhance the economic cooperation of the member countries, and it will possibly bypass the USD dominance.
UAE’s Approach to Blockchain and Cryptocurrency Regulations
UAE keeps high standards of regulations for the crypto economy. The country aims to become a leader in the blockchain world by transitioning traditional finance to the digital realm. Beyond seeking to have most of the government transactions into blockchain technology, it helps the citizens to get clarity by providing advanced regulatory frameworks.
Financial Services Regulatory Authority (FSRA), the legal body of financial services in UAE, has been very active recently in crafting innovative rules and regulations for digital assets. It is accompanied by the Securities and Commodities Authority (SCA) and Virtual Assets Regulatory Authority (VARA).
Final Thoughts: Future Prospects for AE Coin
As a member of BRICS, UAE will possibly push their AE Coin to surpass the dominance of USD-based stablecoins in their own country. It will assert the nation’s economic independence in the digital world and increase the percentage of the pairing of digital assets with blockchain AED.
It was only since 2023, that the dollar seems to have started diminishing its dominance in the oil trade. As more and more countries like the UAE choose to have their own native currency in the digital realm, we will likely see a decrease in the dominance of USD in the blockchain environment, similar to the oil realm.
