UAE becoming a global leader in stablecoin adoption, regulation and bank integration

Al Etihad

2 days ago

1 June 2025 23:54
MAYS IBRAHIM (ABU DHABI)The UAE is establishing itself as a global leader in stablecoin innovation and digital finance, according to a new report by PwC Middle East.It highlights the UAE's rapid adoption of digital assets, regulatory leadership, and the growing momentum among local banks and institutions to integrate stablecoins into their operations.With $34 billion in digital asset flows in the year ending June 2024, the UAE has become the third-largest market for digital assets in the region, trailing only Turkiye and Saudi Arabia. This surge is powered by strong interest from both institutional and professional investors, who together account for over 90% of regional transaction value, the report showed.
Regulatory Blueprint for the Future The report pointed out that the Central Bank of the UAE (CBUAE) has set a regional benchmark with the release of its Payment Token Services Regulation, establishing a comprehensive framework governing the issuance, distribution and custody of stablecoins. The regulation mandates that payment tokens be fully backed 1:1 by reserves in UAE dirhams or other CBUAE-approved fiat currencies. It also requires licensing for all virtual asset service providers (VASPs) and enforces strict capital, risk management, cybersecurity and consumer protection standards.This regulatory clarity offers the UAE 'an early-mover advantage in positioning itself as a market leader', said the report.The CBUAE's Payment Token Services Regulation, together with licensing frameworks from Dubai's VARA, Abu Dhabi Global Market (ADGM), and the Dubai International Financial Centre (DIFC), position the UAE as the 'leading jurisdiction for the development and adoption of payment tokens, dirham-denominated ones.'
Banks Join the Fold Several leading banks in the region have already begun exploring payment token projects as a way to enhance their competitiveness in international markets and appeal to younger, technologically mature consumers, according to the report. 'A dirham-denominated payment token favours the UAE economy by strengthening the position of the UAE dirham in international markets, potentially reducing currency exchange costs, and supporting the nation's digital economy initiatives.'Embracing these payment tokens could empower financial institutions to reduce cross-border transaction costs and improve liquidity and treasury management, the report added. It also noted a particularly strong case for stablecoin use in remittances, given GCC countries' large expatriate population, and in trade finance, as the region strengthens its position as a global trade hub.
'There is general recognition among financial institutions and corporates in the MENA region, and solid evidence that stablecoins will play a significant role in the future of finance, leading to increased investment and experimentation in this technology both regionally and globally,' it stated.