Abu Dhabi institutional giants team up to launch dirham stablecoin

Three major Abu Dhabi institutions — including the emirate’s sovereign wealth fund — have teamed up to launch a new dirham-pegged stablecoin.

Abu Dhabi sovereign wealth fund ADQ, the UAE’s largest bank First Abu Dhabi Bank (FAB), and conglomerate International Holding Company (IHC) said on April 28 that they had partnered to launch the stablecoin, which is currently awaiting regulatory approval.

The stablecoin will be regulated by the UAE Central Bank and backed by the national currency, the dirham, the three companies said. It will also support use cases including machine-to-machine communications (M2M) and artificial intelligence.

According to ADQ, the project aims to put the UAE at the “forefront of global blockchain innovation” while strengthening the country’s digital infrastructure.

If approved by regulators, the new stablecoin will run on the ADI Blockchain created by the ADI Foundation, a nonprofit organization dedicated to assisting existing financial systems and governments in advancing and adopting blockchain technology.

ADQ was established in 2018 as a sovereign wealth fund focused on critical infrastructure and global supply chains. Meanwhile, IHC is one of the largest investment companies and conglomerates in the UAE, with a market value of more than $243 billion and ties to the ruling family of Abu Dhabi, the capital of the UAE.

FAB is the largest bank in the UAE, formed by the merger of First Gulf Bank and National Bank of Abu Dhabi in 2017.

Countries are scrambling to challenge the dominance of US dollar stablecoins

Other countries have also announced plans to launch stablecoins pegged to their own currencies to challenge the market dominance of US dollar stablecoins.

As of April, the market value of stablecoins denominated in US dollars has exceeded $230 billion, up 54% from last year. Among them, Tether (USDT) and USDC account for 90% of the market share.

After US regulators and stablecoin issuer Tether froze wallets related to sanctioned Russian crypto exchange Garantex, an official from the Russian Ministry of Finance proposed the idea of developing a national stablecoin.

However, investment banking giant Citigroup predicted in an April 23 report that stablecoin supply will still be mainly denominated in U.S. dollars, while non-U.S. countries are more likely to promote the development of national currencies or central bank digital currencies (CBDCs).