Central Bank Approves System for Dirham-Backed Crypto Stablecoins

The Central Bank of the United Arab Emirates (CBUAE) has approved a new licensing system designed to oversee cryptocurrency ‘stablecoins’, aiming to boost digital transactions within the Emirates and boost the country’s digital economy.

These ‘stablecoins’ are categorised as cryptocurrencies which are backed by UAE Dirhams, making them less vulnerable to the extreme fluctuations that often characterise many cryptocurrencies. The new system will uphold the UAE’s existing regulations on these payment tokens, which cannot be backed by foreign currencies, digital assets (such as NFTs) or algorithms.

Currently, the Dubai Financial Services Authority (DFSA) only recognises a limited number of crypto tokens, namely Bitcoin, Ether, Litecoin, XRP and Toncoin.