The United Arab Emirates (UAE) is poised to take a significant step in the evolution of its financial landscape with the anticipated rollout of the digital dirham, a central bank digital currency (CBDC), in the fourth quarter of 2025. This initiative, as reported by the Khaleej Times, aims to enhance financial stability while addressing issues surrounding financial crime.
Central Bank of the UAE Governor Khaled Mohamed Balama indicated that the digital dirham would foster the development of innovative digital products and services, opening new avenues for business models and reducing transaction costs. Furthermore, it will increase accessibility to international markets, supporting a transition towards a more integrated financial ecosystem.
The digital dirham will be readily accepted across all payment channels, coexisting alongside its physical counterpart. The recent rebranding of the digital dirham includes a new symbol that represents the currency’s stability, drawing inspiration from the UAE flag.
The Path to Digital Dirhams
In June 2024, the Central Bank of the UAE (CBUAE) took a significant step by approving a licensing framework for the regulation of stablecoins, which marks a critical development in the government’s financial infrastructure program. This was followed by Tether’s announcement to launch a dirham-backed stablecoin in collaboration with local partners Phoenix Group and Green Acorn Investments, reflecting the increasing interest and recognition of digital assets in the region.
In addition to Tether, another player, AED Stablecoin, received in-principle approval on October 18, 2024, to issue a regulated dirham-pegged stablecoin in the UAE. Moreover, on November 1, The Open Network (TON) announced plans to launch Tether’s dirham-pegged stablecoin on its blockchain network.
The Stablecoin Landscape in the UAE
The emergence of dirham-backed stablecoins aligns with a broader acceptance of digital currencies in the UAE, as US dollar and euro-backed stablecoins have started to gain traction. The Dubai Financial Services Authority recognized Circle’s USDC and EURC as the first stablecoins under its crypto token regime, a milestone indicating regulatory support for digital assets.
Companies like Ripple are also keenly observing the evolving landscape of stablecoins in the UAE and are aiming to adapt their offerings to meet local requirements. Their RLUSD stablecoin is already available in the region, showcasing the diversity of stablecoin options gaining ground.
As the UAE prepares for the launch of the digital dirham and the expansion of stablecoins, the banking and financial sectors are on the brink of a transformation that promises to redefine transactions, enhance security, and boost economic growth.
