This move is part of Tether’s strategy to tap into the Gulf region’s growing demand for digital currencies and offer alternatives to the U.S. dollar.
Tether, the leading stablecoin issuer, announced plans to introduce a new stablecoin pegged to the United Arab Emirates Dirham (AED). The new Dirham-pegged stablecoin will join Tether’s existing lineup of fiat-backed tokens, such as USDT, EURT, and others.
Tether’s decision to launch an AED-pegged stablecoin is part of a broader strategy to enhance its global footprint and meet the needs of different economic regions.
The UAE, known for its significant role as a global economic hub, presents a lucrative market for digital currencies. Tether’s CEO, Paolo Ardoino, stressed the importance of this new product, stating that it aims to provide businesses and individuals with a secure and efficient means of transacting in the UAE Dirham.
“Tether’s Dirham-pegged stablecoin is set to become an essential tool for businesses and individuals looking for a secure and efficient means of transacting in the United Arab Emirates Dirham whether for cross-border payments, trading or comply diversifying one’s digital assets,” Ardoino stated.
To ensure the successful launch of the AED-pegged stablecoin, Tether has partnered with UAE-based tech conglomerate Phoenix Group PLC and Green Acorn Investments Ltd. The collaborations are expected to enhance the stablecoin’s adoption and integration within the UAE’s financial ecosystem.
Potential Benefits and Use Cases
The Dirham-pegged stablecoin is expected to offer the following key benefits:
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Improved International Trade: The stablecoin will facilitate cross-border payments, allowing businesses to transact more efficiently with UAE-based partners.
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Streamlined Remittances: With many expatriates living in the UAE, the new stablecoin could simplify remittances to and from the country, reducing transaction fees and speeding up transfers.
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Hedge Against Currency Fluctuations: The stablecoin will provide a digital representation of the AED, offering a hedge against currency volatility and enhancing financial stability for users.
Tether’s Recent Activity
Tether has been actively minting new USDT tokens, with approximately $3 billion minted over the past week alone. The Tron network, in particular, has emerged as a key player in the stablecoin space, with a total of $19 billion USDT minted over the past year.
While the launch of a Dirham-pegged stablecoin presents numerous opportunities, it also raises questions about regulatory oversight and market acceptance.
There has been criticism of Tether’s reserves and transparency in the past, and the introduction of another stablecoin in such a highly regulated country as the UAE will likely require rigorous compliance measures.
The stablecoin market, currently valued at $150 billion, continues to expand rapidly.
Tether’s USDT represents over $117 billion of this total, showing the company’s dominance in the sector. Industry forecasts predict that the stablecoin market could grow to $2.8 trillion by 2028.
