04 Jun

Recent reports indicate that the Central Bank of the UAE has given the green light to a new regulation governing the licensing and supervision of stablecoins. Additionally, a set of policies to bolster the banking, insurance, and financial services sectors has been approved. 

The meeting also delved into discussions on CBDCs, particularly the digital Dirham, as part of the Central Bank's FIT Program. Other projects under FIT include the Instant Payments Platform (Aani) and the Jaywan Domestic Card Scheme.

UAE commercial banks are encouraged to integrate CBDC

Earlier this year, an EY (Ernst & Young) study stated that the UAE Central Bank is operationalizing its domestic CBDC and urging all UAE commercial banks and payment processors to engage in a pilot integration with the Central Bank UAE node for digital dirham issuance.

The meeting was presided over by His Highness Sheikh Mansour bin Zayed Al Nahyan, Vice President, Deputy Prime Minister, Chairman of the Presidential Court, and Chairman of the Central Bank of the UAE.

The UAE regulates stablecoins as the market grows

This meeting came just one day after the Dubai Financial Services Authority at DIFC (Dubai International Financial Centre) allowed the use of stablecoins within its jurisdiction.

Stablecoins have recently developed as a bridge between the steadiness of traditional finance and the creativity of cryptocurrency. Unlike other cryptocurrencies, whose values can fluctuate dramatically, stablecoins are linked to a stable asset, usually a fiat money such as the US dollar. This peg intends to provide a more stable store of value inside the cryptocurrency ecosystem.

Big players like PayPal are already adopting stablecoins

In May 2024, the stablecoin ecosystem returned, with a market capitalization of $161 billion, up 0.63% from the previous month. According to CCData, this is the greatest level since April 2022, after eight months of consistent rise.

Well-known competitors like PayPal are joining the fray. PayPal introduced the PayPal USD (PyUSD) stablecoin on the Solana blockchain at the end of May 2024. PyUSD can be sent by users to the Ethereum and Solana blockchains. Financial regulators are being forced to control the stablecoin market as it expands because to its rapid development. 

June 2024, Cryptoniteuae

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