UAE Poised to Become MENA's Stablecoin Powerhouse

Fintech News ME

3 hours ago

The United Arab Emirates (UAE) is poised to become a regional leader in digital assets and stablecoin adoption.
This is supported by progressive regulation, robust digital infrastructure, and booming crypto usage, according to a new report by PwC and Abu Dhabi-headquartered digital assets infrastructure provider Fuze.
The report, released in May, looks at the state of digital asset and stablecoin adoption in MENA, highlighting the UAE's growing prominence, and sharing emerging trends and opportunities.
According to the report, the UAE ranks third in digital asset transaction volume in MENA, with US$34 billion recorded in the year ending June 2024 and a 30% adoption rate. It follows Turkey with US$170 billion and a 52% adoption rate, and Saudi Arabia with US$47 billion and a 20% adoption rate.
In addition to an active crypto market, the UAE also benefits from forward-thinking regulators. In particular, the Payment Token Services Regulation, introduced by the Central Bank of the UAE (CBUAE) and effective from August 2024, establishes a comprehensive framework for regulating stablecoins and payment token services.
The regulation mandates licensing for issuers, distributors, and custodians, and requires full fiat reserve backing, par value redemption, as well as adherence to strict governance, risk, and anti-money laundering (AML) and countering the financing of terrorism (CFT) standards.
Though compliance to the Payment Token Services Regulation is complex and resource-intensive, the regulation delivers increased credibility and long-term growth potential for firms able to meet its high standards. It's also significant because it represents a formal acknowledgment and acceptance of digital tokens intended to be used as payment instruments.
CBUAE's Payment Token Services Regulation, paired with licensing regimes from Dubai's Virtual Asset Regulatory Authority (VARA), the Financial Services Regulatory Authority (FSRA), and the Dubai Financial Services Authority (DFSA), are positioning the UAE as the leading jurisdiction for the development and adoption of payment tokens, particularly dirham-denominated ones.
This progress is underscored by a number of recent developments. In December 2024, AE Coin secured the final approval from the CBUAE, becoming the first fully licensed dirham-backed stablecoin in the UAE. AE Coin aims to provide an instant, secure, stable, innovative, low-cost, and efficient payment method designed for the digital economy.
In February 2025, DFSA approved Circle's USDC and EURC stablecoins as recognized crypto tokens. The development marked the first instance of stablecoins being approved under the DIFC's crypto token regime, allowing USDC and EURC to be incorporate into digital asset services, payments, treasury management, and other financial applications.
Most recently, Abu Dhabi sovereign wealth fund ADQ, conglomerate IHC, and the UAE's biggest lender by assets First Abu Dhabi Bank (FAB), unveiled plans to launch a new stablecoin backed by dirhams. The stablecoin, which will be fully regulated by the UAE's central bank, will be issued by FAB subject to regulatory approval, the organizations said.
The potential of stablecoins in MENA
In the UAE and the broader MENA region, stablecoins and payment tokens hold significant potential to enhance financial services by enabling faster and cheaper cross-border payments, more efficient treasury operations, and the development of new, innovative financial products.
The UAE, a leading financial and trade hub, is expected to benefit from stablecoin-powered cross-border payments. These digital assets have the potential to streamline international payments by offering near-instant transfers at lower costs than traditional SWIFT channels, while maintaining compliance with the CBUAE's AML/CFT regulations. This would benefit both businesses and individuals seeking efficient overseas money transfers, while giving banks an edge and fintech over conventional remittance services.
As a major global trade centre, the UAE also stands to benefit from the use of stablecoins in trade finance. In this application, smart contracts and tokenized collateral are set to streamline traditional processes such as letters of credit and supply-chain financing, reducing manual intervention and operating costs. They also promise faster settlement, and enhanced transparency.
Banks in the region can also use stablecoins for faster, round-the-clock settlements among themselves and with partners and suppliers, while multinational corporations can manage liquidity more efficiently across currencies and jurisdictions.
Finally, stablecoins open the door to a new wave of innovation and commercial opportunities. These range from consumer-facing wallets and micro-payment solutions for e-commerce to collateralized lending products. Banks in the region also have an opportunity to pioneer Sharia-compliant products enabled by stablecoins, such as stablecoins backed by Sukuk (Islamic bonds) or integrated into Murabaha (Islamic financing structure). These products have the potential to unlock access to digital assets for the Islamic population, while also attracting investors who seek alternatives to interest-based transactions.
Stablecoins are digital currencies designed to maintain a stable value by being pegged to a reserve asset like a fiat currency. These digital currencies offer the speed and efficiency of blockchain technology without the volatility of traditional cryptocurrencies, enabling faster, cheaper, and more secure transactions. This makes them particularly promising for use cases including cross-border payments and settlements.
The Citi Institute estimates that the global stablecoin market could soar to US$3.7 trillion by 2030, marking an increase of nearly 1,500% from its total value of US$234 billion in March 2025.