The Central Bank of the United Arab Emirates granted in-principle approval to AED Stablecoin under its payment token regulation framework, making the company a frontrunner in the race to issue the first regulated dirham-pegged stablecoin in the UAE.

Preliminary Approval of AED Stablecoin

AED Stablecoin's preliminary license eases concerns about potential restrictions on crypto payments, which emerged following the recent release of the bank's licensing framework. This framework prohibits the use of crypto for payments unless it involves licensed dirham-pegged tokens. If fully approved, the AE Coin stablecoin could serve as a local trading pair for cryptocurrencies on exchanges and decentralized platforms.

Stablecoin Market Competition

AED Stablecoin is expected to face competition from Tether, the issuer of the world's largest stablecoin, USDt. Tether recently announced partnerships with local firms Phoenix Group and Green Acorn Investments to release its own dirham-pegged stablecoin.

Crypto-Friendly Regulation in UAE

The UAE's crypto-friendly regulatory environment continues to attract major players. OKX has recently launched a retail and institutional trading platform after obtaining a full license, including derivatives trading for qualified institutional investors. Additionally, crypto exchange M2 opened a system that allows residents to directly convert dirhams into Bitcoin and Ether.

The development and upcoming competition in the UAE stablecoin market underline the importance of cryptocurrency regulations that draw the attention of global players.