According to recent reports, the Central Bank of the UAE approved the issuance of a regulation for licensing and overseeing stablecoins and a series of policies aimed at supporting the banking, insurance, and financial services sectors.
The meeting also reviewed CBDC (Central Bank Digital Currencies), the digital Dirham, which is part of the Central Bank’s Financial Infrastructure Transformation Program (FIT). Other FIT projects include the Instant Payments Platform (Aani) and the Jaywan Domestic Card Scheme.
UAE Commercial Banks Encouraged to Integrate CBDC
Earlier this year, an EY (Ernst &Young) report noted that the Central Bank of the UAE is operationalizing its domestic CBDC and encouraging all UAE commercial banks and payment processors to participate in a pilot integration with the Central Bank UAE node for issuing digital Dirham.
Also read: UAE Central Bank Piloting CBDC With UAE Commercial Banks and Payment Processors
The meeting was chaired by His Highness Sheikh Mansour bin Zayed Al Nahyan, Vice President, Deputy Prime Minister, Chairman of the Presidential Court, and Chairman of the Central Bank of the UAE (CBUAE).
UAE Regulates Stablecoins as the Market Grows
This meeting was held just one day after the Dubai Financial Services Authority in DIFC ( Dubai International Financial Centre) also approved the introduction of stablecoins in its jurisdiction.
Also read: DFSA Amends Crypto Regulations in Dubai’s Special Economic Zone
Lately, stablecoins have emerged as a bridge between the stability of traditional finance and the innovation of cryptocurrencies. Unlike other cryptocurrencies whose value can fluctuate wildly, stablecoins are pegged to a stable asset, typically a fiat currency like the US dollar. This peg aims to offer a more predictable store of value within the crypto ecosystem.
Big Players like PayPal are Already Adopting Stablecoins
In May 2024, the stablecoin ecosystem rebounded, achieving a market capitalization of $161 billion, marking a 0.63% increase from the month’s outset. According to CCData, this marks the highest level since April 2022, following eight months of steady growth.
Established players like PayPal are entering the arena. At the end of May 2024, PayPal launched its PayPal USD (PyUSD) stablecoin on the Solana blockchain. Users will be able to send PyUSD to both Solana and Ethereum blockchains. Such rapid development is pushing financial regulators to regulate the stablecoin market as it grows.
Cryptopolitan reporting by Lara Abdul Malak
