As a seasoned crypto investor with a knack for spotting trends and potential opportunities, this latest development in the UAE’s stablecoin landscape has piqued my interest. Having navigated through the turbulent waters of the crypto market for years, I can confidently say that the Central Bank of the United Arab Emirates (CBUAE) is laying a red carpet for digital assets, and it’s hard not to be intrigued by the prospect of AED Stablecoin’s AE Coin.
According to a recent announcement from the company, the Central Bank of the United Arab Emirates (CBUAE) has given preliminary approval for the AED Stablecoin under their Payment Token Service Regulation system.
As an analyst, I find myself excitedly observing that my perspective has shifted with the preliminary approval of AED Stablecoin’s license. This puts AED Stablecoin at the forefront of the competition, potentially making history as the pioneer to launch a regulated dirham-pegged stablecoin in the UAE.
As a researcher delving into the realm of cryptocurrencies, I find relief in the latest advancement that alleviates apprehensions about limitations on digital currency transactions. This anxiety arose after the Central Bank of UAE (CBUAE) unveiled its licensing framework, which restricts crypto payments unless they involve licensed tokens pegged to the dirham. However, this new development seems to offer a promising path forward.
Should AED Stablecoin’s AE Coin gain full approval, it has the potential to function as a trading option alongside other cryptocurrencies on various exchanges and decentralized platforms. Furthermore, it could offer merchants the convenience of accepting this coin for their goods and services.
The central bank’s regulatory structure excludes algorithmic stablecoins and privacy tokens, preferring assets that are completely backed by cash.
Stablecoin issuers must hold an equivalent amount of United Arab Emirates Dirhams in a dedicated, segregated account within a UAE bank as collateral for the stablecoins they issue.
In another scenario, they might maintain at least half of their reserve funds in liquid cash form, while the rest could be invested in UAE treasury bonds and Central Bank of UAE Monetary Bills, with a maturity period not exceeding half a year.
UAE’s crypto red carpet
The AED Stablecoin could potentially encounter rivalry from Tether, the company behind the world’s leading stablecoin in terms of market cap, USDT (Tether).
Tether recently shared news about teaming up with local businesses, Phoenix Group and Green Acorn Investments, for the launch of a stablecoin that is pegged to the UAE Dirham.
Meanwhile, the UAE’s crypto-friendly regulatory environment has been attracting major players.
Example such as OKX has introduced a trading platform catering to both retail and institutional clients in the United Arab Emirates following the acquisition of a comprehensive license that enables derivatives trading for accredited institutional investors.
Moreover, the cryptocurrency platform M2 has launched a novel feature enabling local residents to instantly swap UAE Dirhams for Bitcoin (BTC) and Ether (ETH) directly.
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2024-10-14 14:09