Abu Dhabi doubles down on crypto as wealth fund, FAB, IHC join forces for new stablecoin

Stablecoins are digital tokens designed to keep a constant value backed by traditional currencies such as the US dollar

Representations of cryptocurrencies are seen in this illustration, August 10, 2022.

Reuters

Abu Dhabi sovereign wealth fund ADQ, conglomerate IHC, and the UAE's biggest lender by assets First Abu Dhabi Bank (FAB) are planning to launch a new stablecoin backed by dirhams, they said on Monday, as the Gulf country deepens its investment in cryptocurrencies.

The stablecoin, which will be fully regulated by the UAE's central bank, will be issued by FAB subject to regulatory approval, the three companies said in a statement.

"This stablecoin will be used as a reliable digital currency across a wide range of everyday scenarios - by citizens and consumers, businesses and institutions," they said.

Stablecoins are digital tokens designed to keep a constant value backed by traditional currencies such as the U.S. dollar. They have seen rapid growth, both as a form of payment and among traders wanting to buy and sell outside of the regulated banking system.

The UAE, which is aiming to become a global center for digital assets, has been quick to enable cryptocurrency payments, boosting adoption rates and transaction volumes.

In December, the state introduced its first UAE dirham-backed stablecoin – AE Coin, and last month investment group MGX made a $2 billion investment in Binance - one of the largest deals ever in the crypto industry.