UAE Approves In-Principle License to First AED Stablecoin Issuer
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The Central Bank of the United Arab Emirates (CBUAE) granted in-principle approval to AED Stablecoin on October 14, making the firm the first issuer of a fully regulated dirham-pegged stablecoin in the region (UAE).
This latest development falls under the CBUAE’s newly established Payment Token Service Regulation framework and aligns perfectly with the UAE government’s Digital Government Strategy 2025.
Recently, the central bank released a licensing framework that prohibits using crypto for payments unless it involves licensed dirham-pegged tokens. The approval of AED Stablecoin alleviates these worries and now points towards a more inclusive approach to cryptocurrency.
While this initial license does not provide full authority to implement its stablecoin plans immediately, it represents a critical step toward realizing its ambitions.
AED Stablecoin aims to launch the AE Coin, a dirham-pegged stablecoin intended to function as both a local trading pair and a widely accepted payment method for everyday transactions within the UAE.
However, the recent regulatory updates pose challenges for AED Stablecoin. The CBUAE’s licensing framework also establishes stringent regulations for stablecoins.
It prohibits using algorithmic stablecoins and privacy tokens. Instead, it emphasizes the necessity for fully cash-backed assets.
Issuers must ensure their stablecoins are backed by cash held in a separate escrow account denominated in dirhams within a UAE bank.
Alternatively, issuers can maintain at least 50% of their reserve assets in cash, with the
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