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The United Arab Emirates expects its digital dirham central bank digital currency to roll out in the fourth quarter of 2025.
According to a report in the Khaleej Times, Central Bank of the UAE Governor Khaled Mohamed Balama reportedly said that the blockchain-based currency could improve financial stability and help combat financial crime. According to the report, the retail sector could expect the issuance of a digital dirham in the last quarter of 2025.
“It [digital dirham] will further enable the development of innovative digital products, services, and new business models while reducing cost and increasing access to international markets,” Balama reportedly said.
The report also stated that the digital dirham and its physical counterpart will be accepted as a payment method in all payment channels.
The news comes as the digital dirham received a rebrand. The first letter of the dirham will be its international symbol, along with two horizontal lines representing the currency’s stability, inspired by the UAE flag.
The new symbol for UAE dirhams. Source: Khaleej Times
The road to digital dirhams in the UAE
In June 2024, the CBUAE approved a licensing framework for regulating stablecoins. In a meeting with the CBUAE board of directors in Abu Dhabi, UAE officials discussed the government’s financial infrastructure program and approved the framework. The new rules clarified the issuance, licensing and supervision of payment tokens backed by the UAE dirham.
Following the framework’s approval, stablecoin issuer Tether announced its plans to launch a dirham-backed stablecoin with local partners Phoenix Group and Green Acorn Investments. The collaboration aims to establish a fully-backed digital representation of the UAE dirham currency.
After the framework approval, other players joined the race to create a dirham-backed stablecoin. On Oct. 18, 2024, a company called AED Stablecoin received in-principle approval for issuing a regulated dirham-pegged stablecoin in the UAE.
On Nov. 1, The Open Network (TON) announced that Tether’s dirham-pegged stablecoin will be launched on its blockchain network.
Related: Abu Dhabi’s financial free zone signs MoU with Chainlink for tokenization frameworks
Stablecoins in the UAE
Apart from dirham-backed stablecoins, US dollar and euro stablecoins have also gained traction in the country.
On Feb. 24, the Dubai Financial Services Authority, the independent regulator for the Dubai International Financial Centre (DIFC), recognized Circle’s USDC and EURC as the first stablecoins under its crypto token regime.
Meanwhile, a Ripple spokesperson previously told Cointelegraph that the company is working to understand the country’s stablecoin requirements. The spokesperson said they are monitoring the developments closely and that their RLUSD stablecoin is available in the UAE.
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