UAE Central Bank Greenlights Dirham Stablecoin After Dollar-Pegged Token

The Central Bank of the UAE (CBUAE) has approved the launch of DDSC, a token pegged to its local currency backed by domestic firms, according to an announcement.

DDSC is being developed in collaboration with one of the country’s largest banks - First Abu Dhabi Bank (FAB) – investment firm IHC, and blockchain tool builder Sirius International Holding. The token, which is set to go live soon, is being built on the UAE-based layer 2 ADI Chain.

The stablecoin is specifically designed to handle treasury and high-value transactions. DDSC is being built for enterprise and government clients, and FAB clients will be the first to be granted access.

UAE leads crypto adoption in Asia

The Middle Eastern country has become a haven for crypto firms, particularly its two most influential emirates, Dubai and Abu Dhabi. The country has built a robust system for the growth of digital assets, supported by dedicated crypto regulators.

The influx of crypto firms in the UAE has been backed by its clear policy stance, promotion of digital assets, and tokenization push. In January, the Dubai Financial Services Authority (DFSA) updated its regulatory framework. DFSA changed its policy to enhance customer protection, ease conduct conditions, and bring its
policies in line with other international regulatory regimes.

Stablecoins to drive mainstream usage

An enterprise-grade token like DDSC could prompt institutions to use stablecoins for internal and cross-border payments in dirhams, as the country seeks to raise its currency's standing in global markets.

While DDSC is the first dirham-pegged token approved by the CBUAE, it’s not the first stablecoin approved by the central bank. Last month, the central bank approved First Digital’s dollar-pegged stablecoin USDU for use in the country. 

Using USDU, firms can bypass the complex web of registrations required for foreign currency transactions in the UAE.