The UAE’s Central Bank has given its stamp of approval to a rule that will govern the licensing and oversight of stablecoins.
There have been rumors circulating that the UAE Central Bank has authorized a set of measures intended to strengthen the country’s banking, insurance, and financial services industries, as well as a legislation to regulate and monitor stablecoins.
As part of its Financial Infrastructure Transformation Program (FIT), the Central Bank also discussed CBDC, an acronym for “Central Bank Digital Currencies,” during the conference. This digital dirham is one component of CBDC. The Jaywan Domestic Card Scheme and the Instant Payments Platform (Aani) are two more FIT initiatives.
According to a report by EY (Ernst & Young) earlier this year, the Emirates Central Bank is getting its domestic CBDC up and running and is pushing for all UAE commercial banks and payment processors to take part in a trial integration with the UAE Central Bank node for digital Dirham issuance.
Vice President, Deputy Prime Minister, Chairman of the Presidential Court, and Chairman of the Central Bank of the UAE (CBUAE) His Highness Sheikh Mansour bin Zayed Al Nahyan presided over the meeting.
This gathering took place the day after the Dubai International Financial Centre (DIFC) Financial Services Authority likewise gave its stamp of approval to the use of stablecoins within its purview.
Stablecoins have recently arisen as a medium that combines the security of conventional banking with the potential for innovation in cryptocurrency. Stablecoins are digital currencies that are tied to a fiat currency, such as the US dollar, rather than other cryptocurrencies whose value might move greatly. The goal regarding this peg is to provide a more stable cryptocurrency asset inside the ecosystem.
The stablecoin ecosystem had a strong comeback in May 2024, with a market value of $161 billion, a gain of 0.63% from the beginning of the month. This is the peak since April 2022, after eight months of consistent increase, according to CCData.
There are new entrants to the field, including PayPal. Launched on the Solana blockchain around the tail end of May 2024, PayPal USD (PyUSD) was the company’s stablecoin. The Solana and Ethereum blockchains will both support the transfer of PyUSD. The stablecoin market is expanding at a fast pace, which is putting pressure on financial authorities to intervene.
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