Crypto

Ripple Rumored To Consider Dirham-Backed Stablecoin In UAE

Ripple Labs may be on the brink of launching a dirham-backed stablecoin in the United Arab Emirates (UAE), venturing beyond its current US-dollar-backed stablecoin, RLUSD. This conjecture stems from Ripple’s recent blog post dated November 7, 2024, entitled “UAE Stablecoin Regulation: A Blueprint for Financial Innovation.” The post strongly suggests Ripple’s burgeoning interest in a dirham-backed stablecoin.

Ripple’s Potential Dirham-Backed Stablecoin: What the Future Holds

The blog post elaborates on the UAE Central Bank’s (CBUAE) newly devised regulatory framework meant to incorporate both dirham-backed and non-AED stablecoins into the country’s financial ecosystem. This framework symbolizes a transformative shift in the financial landscape. “New regulations from the Central Bank of the United Arab Emirates (CBUAE) designed to integrate dirham-backed stablecoins as well as non-AED backed stablecoins into its financial systems are emblematic of this shift,” states Ripple.

The CBUAE’s regulatory framework endeavors to elevate the UAE’s position as a global leader in digital asset regulation by offering definitive guidelines that promote the issuance and utilization of AED-backed stablecoins for payments, while allowing non-dirham stablecoins to register for virtual asset transactions. “By embracing stablecoins, the UAE is laying the groundwork for safer, more efficient financial systems,” Ripple’s blog emphasizes.

Ripple’s Established Presence in the UAE

Ripple has already carved a significant niche in the Middle East. The National Bank of Abu Dhabi was a pioneer in the region, implementing Ripple Payments for secure and cost-effective remittance solutions, managing nearly $80 million in outbound remittances in 2022. Additionally, XRP gained approval from the Dubai Financial Services Authority (DFSA) for use within the Dubai International Financial Centre (DIFC) towards the end of last year.

Aligning with UAE’s Regulatory Objectives

The potential introduction of a dirham-backed stablecoin by Ripple dovetails with the CBUAE’s goals to foster a regulated stablecoin environment that mitigates the volatility associated with cryptocurrencies and bolsters investor protection. “The CBUAE’s aim is to proactively promote a well-regulated stablecoin ecosystem, specifically dirham-backed stablecoins, to offset more volatile cryptocurrencies and better protect investors,” the blog elaborates.

Growing Interest in UAE’s Stablecoin Market

Notably, Tether has also expressed an interest in the UAE stablecoin market, revealing plans to launch a UAE stablecoin pegged to the dirham as an alternative to the US dollar. The region has swiftly ascended to become the sixth largest crypto economy globally, handling nearly $400 billion in on-chain value between July 2022 and June 2023, according to Ripple.

A Progressive Regulatory Environment

The UAE’s comprehensive regulatory approach stands in contrast to other global frameworks, such as the United States’ proposed Clarity of Payment Stablecoins Act and the European Union’s MiCA regulations. Unlike these, the UAE’s framework allows unrestricted use of dirham-backed stablecoins for payments while limiting non-dirham stablecoins to virtual asset transactions, without enforcing transaction caps. “This measured approach would also manage risks around liquidity, market volatility, compliance, and operational challenges,” the blog notes.

Embracing Digital and Blockchain Innovation

With a tech-savvy populace and a government keen on fostering innovation, the UAE is fertile ground for integrating digital banking and blockchain into its financial sector. Ripple’s team concludes that “stablecoins are now set to play a crucial role in the country’s economic diversification alongside its broader plans to launch a Central Bank Digital Currency (CBDC).”

As of the latest reports, XRP was trading at $0.55.

Emma Horvath

After graduating Communication and Media Studies MA in Eötvös Loránd University, Emma started to realize that her childhood dream as a creative news reporter committed to find dynamic journalism stories.I'm a passionate journalist with a keen interest in the fast-evolving world of cryptocurrencies. I've been reporting on the latest developments in the crypto industry for several years now, covering breaking news and providing insights on how the market is trending. I'm adept at analyzing daily market movements, researching ICOs, and keeping track of the latest innovations in blockchain technology.My expertise in the space makes her a trusted voice in the crypto community. Whether it's the latest Bitcoin price movements or the launch of a new DeFi platform, I am always at the forefront, bringing her readers the most up-to-date and informative news.

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