Abu Dhabi Institutional Giants Team Up to Launch Dirham-Pegged Stablecoin

In a landmark move for the Middle East’s digital economy, three of Abu Dhabi’s most influential institutions—ADQ, First Abu Dhabi Bank (FAB), and International Holding Company (IHC)—have announced a partnership to launch a UAE dirham-pegged stablecoin. This initiative, pending regulatory approval, aims to position the UAE as a global leader in blockchain innovation while strengthening its digital financial infrastructure.

Why a Dirham Stablecoin Matters

The proposed stablecoin will be regulated by the UAE Central Bank and fully backed by the dirham, ensuring stability and trust. Unlike volatile cryptocurrencies, stablecoins offer the benefits of blockchain—speed, transparency, and programmability—without price fluctuations. This makes them ideal for everyday transactions, cross-border payments, and emerging use cases like machine-to-machine (M2M) payments and AI-driven financial systems.

Key Players Behind the Initiative

• ADQ: Abu Dhabi’s sovereign wealth fund, focused on infrastructure and global supply chains.
• First Abu Dhabi Bank (FAB): The UAE’s largest bank, with deep expertise in traditional and digital finance.
• International Holding Company (IHC): A $243 billion conglomerate with ties to Abu Dhabi’s ruling family.

The stablecoin will operate on the ADI blockchain, developed by the ADI Foundation, a nonprofit dedicated to advancing blockchain adoption in institutional settings.

The Global Stablecoin Race: Challenging the US Dollar Dominance

While US dollar-pegged stablecoins like Tether (USDT) and USDC dominate the $230 billion market, nations are increasingly exploring sovereign alternatives. Russia, for instance, recently proposed a ruble-backed stablecoin after US sanctions targeted its crypto transactions. However, Citigroup predicts that dollar-denominated stablecoins will retain dominance, with other countries focusing on central bank digital currencies (CBDCs) instead.

The UAE’s dirham stablecoin could serve as a blueprint for other nations seeking to reduce reliance on the dollar while embracing blockchain efficiency.

Potential Use Cases and Benefits

• Cross-border trade: Instant settlements between UAE businesses and global partners.
• Smart contracts: Automating payments in sectors like real estate and logistics.
• AI and IoT integration: Enabling autonomous transactions between devices.

Regulatory Hurdles and Future Outlook

The project’s success hinges on approval from UAE regulators, who have been progressively supportive of crypto innovation. Earlier this year, the Central Bank greenlit another dirham-backed stablecoin, signaling openness to such initiatives.

If launched, this stablecoin could accelerate the UAE’s vision of becoming a global crypto hub, complementing its existing fintech-friendly policies and tax-free zones like Dubai’s Virtual Assets Regulatory Authority (VARA).

Conclusion: A Strategic Leap for the UAE

By leveraging its financial heavyweights and regulatory foresight, Abu Dhabi is positioning itself at the forefront of the stablecoin revolution. This initiative not only diversifies the global stablecoin market but also sets a precedent for how nations can harness blockchain to enhance economic sovereignty.

What’s next? Keep an eye on regulatory updates—this stablecoin could go live sooner than expected, reshaping regional and global digital finance.