Stablecoin issuer Tether has announced plans to launch a stablecoin pegged to the United Arab Emirates dirham. In an August 21 announcement, Tether Inc., the world’s largest stablecoin issuer, revealed that the new stablecoin would be developed in collaboration with Phoenix Group PLC, a UAE-based tech giant, and Green Acorn Investments Ltd.

While the exact timeline for the launch remains undisclosed, the new asset will be backed 1:1 by liquid UAE-based reserves and issued under the Payment Token Services Regulation introduced by the Central Bank of UAE in June. Tether aims to secure licensing under this framework to ensure compliance, according to the press release.

Dubai has experienced a surge in cryptocurrency use since the establishment of the Virtual Asset Regulatory Authority (VARA) in 2022. VARA, an independent regulatory body, oversees the licensing, regulation, and governance of the cryptocurrency sector.

Tether anticipates that the new stablecoin will serve as a cost-effective alternative, facilitating international trade and remittances while acting as a hedge against currency fluctuations. Paolo Ardoino, CEO of Tether, expects the stablecoin to become an essential tool for businesses and individuals seeking a secure and efficient means of transacting via the dirham.

“The United Arab Emirates is becoming a significant global economic hub, and we believe our users will find our Dirham-pegged token to be a valuable and versatile addition.” – Paolo Ardoino

The upcoming stablecoin will join other fiat-pegged stablecoins developed by Tether over the years. In 2020, Tether launched EURT, the euro-backed stablecoin, and two years later introduced the Chinese yuan-backed CNHT.

Tether’s flagship asset, USDT, remains the largest stablecoin in the world, with a market capitalization of over $117 billion, translating to an almost 70% market share. Despite being a market leader, Tether has faced criticism for possible misuse of USDT by entities facing sanctions and other illicit uses. To address these concerns, Tether partnered with blockchain analytics firm Chainalysis to oversee USDT transactions in the secondary market.

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