Experts say stablecoins could revolutionise remittances, retail payments, and financial inclusion in the Emirates
Stablecoins are on the verge of widespread adoption in the UAE, with the launch of AE Coin— the nation’s first regulated dirham-pegged digital currency—marking a transformative moment in the country’s financial evolution.
AE Coin, which received final regulatory approval in December, is expected to hit the market “soon,” a move analysts say could significantly alter how residents and businesses conduct financial transactions. The launch follows the UAE Central Bank’s Digital Dirham strategy, which began in March 2023 as part of a broader push to integrate digital assets into the national economy.
“Utility will drive stablecoin adoption … clear regulation and compliance are fundamental to all financial services and are as important to blockchain adoption,” said Reece Merrick, managing director for Middle East and Africa at Ripple.
Efforts to regulate digital currencies have accelerated across the Emirates. Regulatory frameworks by the Abu Dhabi Global Market and Dubai’s Virtual Assets Regulatory Authority are already in place, complemented by the Central Bank’s unveiling of a new digital-oriented dirham symbol last month.
In addition to AE Coin, Tether—the issuer of USDT, the world’s largest stablecoin—was cleared in August to develop its own UAE-based offering.
“Traditional banking systems are either limited, slow, or entirely inaccessible in many regions,” said Sebastien Badault, a vice president at Ledger. “This is where stablecoins have the potential to be a game-changer.”
Unlike conventional financial systems reliant on physical branches and extensive paperwork, stablecoins require only internet access and a digital wallet—making them especially valuable for remittances. The UAE ranks among the top 10 countries for outbound remittances, according to World Bank data.
For small businesses, migrant workers, and individuals in countries grappling with currency instability, stablecoins offer an efficient, low-cost alternative. Arushi Goel, policy lead at Chainalysis for the Middle East and Africa, noted that “they function as a gateway to broader crypto trading.”
Chainalysis data reveals that 93 per cent of stablecoin transfers in the UAE are retail-sized, highlighting their role in empowering individual investors. Other nations are also embracing stablecoins: El Salvador became the first to issue one last year, while Australia, China, Hong Kong and Singapore have introduced various regulatory frameworks.
Pegged to fiat currencies or backed by reserves such as precious metals and government treasuries, stablecoins offer greater price stability than volatile cryptocurrencies like bitcoin. Visa and Allium estimate the global stablecoin market will hit $208 billion this year—an increase of 28.4 per cent from 2024.
Retailers are also set to benefit. Compared to traditional payment systems that take hours or days to settle and charge fees of 2-3 per cent, crypto transactions are near-instantaneous and come at a fraction of the cost.
In January, the Dubai Multi Commodities Centre and Reit Development announced the upcoming Crypto Tower, a blockchain-powered hub in Jumeirah Lakes Towers, designed to revolutionise real estate transactions, tenant management, and on-chain governance.
“Ultimately, stablecoins and decentralised finance are addressing the pain points of traditional finance systems,” a Binance representative said. “Stablecoins play a significant role in cross-border payments and remittances because they don’t require middlemen.”
Josh Gilbert, an analyst at eToro, echoed the sentiment. “We’re already seeing financial institutions explore CBDCs … Stablecoins play a significant role in cross-border payments and remittances because they don’t require middlemen or hefty service fees, all without having to worry about volatility.”
Despite ongoing resistance from traditional banks, institutions are beginning to adapt. Standard Chartered announced a partnership in February to launch a stablecoin pegged to the Hong Kong dollar. PayPal, Bank of America and Stripe are also entering the space.
“Those who integrate stablecoin infrastructure into their offerings rather than fight it will not only survive but emerge as leaders in the next financial era,” Badault added.
Yet, challenges remain. Analysts caution that regulation, transparency, and proper reserve backing are essential to long-term success. The collapse of Luna in 2022 underscored the need for oversight to avoid systemic risk.
“To ensure mainstream adoption, regulators must establish clear guidelines on reserve backing, transparency and consumer protection,” said Gilbert, who warned that even proactive nations like the UAE would need more time before stablecoins become part of fully regulated systems.
