Dubai: Stablecoins, once confined to cryptocurrency exchanges and niche financial circles, are rapidly entering mainstream finance as banks, regulators, and global payment networks begin treating them as practical tools rather than speculative assets.
For residents in the UAE, this shift is no longer theoretical. With the country licensing its own dirham-backed stablecoin and international financial institutions building payment infrastructure around the technology, stablecoins are emerging as a new form of digital money designed for everyday use.
Stablecoins are digital tokens created to hold a fixed value, typically pegged one-to-one to traditional currencies such as the US dollar or the UAE dirham. Unlike volatile cryptocurrencies such as Bitcoin, whose prices can swing sharply within minutes, stablecoins are structured to remain stable, making them suitable for payments, transfers, and settlements.
In simple terms, a stablecoin functions like digital cash that moves on blockchain networks. Its value remains unchanged, but it can be transferred almost instantly, at any time of day, without depending on banking hours or legacy payment systems.
A market growing at record speed
The global stablecoin market recorded its strongest growth to date in 2025.
According to data from DeFi Llama, total stablecoin supply rose by nearly 49 per cent during the year, increasing from around $205 billion in January to approximately $306 billion by late November. Analysts attribute this expansion to clearer regulation and growing institutional participation.
Over the past year, the United States introduced its first federal-level framework for stablecoins, while Europe implemented its Markets in Crypto-Assets regulation. At the same time, major financial companies began integrating stablecoins into their payment and settlement systems.
Visa and Mastercard have announced plans to support stablecoin settlements. Stripe launched stablecoin issuance and transfer tools across more than 100 countries. PayPal expanded its stablecoin offering as circulating supply passed $1 billion. Meanwhile, Circle, the issuer of USDC, listed on the New York Stock Exchange, highlighting how closely the sector is now tied to traditional finance.
Executives at global payment firms have said stablecoins could see especially strong adoption in emerging markets, where access to fast, low-cost digital dollars or local currency equivalents remains limited.
How stablecoins maintain their value
Most stablecoins rely on a reserve-based structure to keep their price fixed.
For every digital token issued, the operator holds an equivalent amount of the underlying currency in regulated bank accounts or highly liquid assets. If a stablecoin represents one dollar or one dirham, the issuer is expected to hold that same value in reserve.
Users can convert traditional money into stablecoins, transfer them across blockchain networks, and redeem them back into cash. When a coin is redeemed, it is removed from circulation. This redemption mechanism helps keep the market price aligned with the underlying currency.
Because holders know they can exchange the token for cash at face value, stablecoins tend to trade close to their peg.
Stablecoins versus banks and cryptocurrencies
The distinction between stablecoins, traditional bank transfers, and cryptocurrencies comes down to stability, speed, and oversight.
Cryptocurrencies such as Bitcoin are primarily treated as investment assets. Their prices fluctuate significantly, and transaction settlement can take several minutes or longer during periods of congestion.
Bank transfers, while stable and heavily regulated, can be slow. Domestic payments may take hours, while international transfers often take several days and may not operate outside business hours.
Stablecoins aim to combine price stability with constant availability. They operate around the clock, settle in seconds, and are designed to mirror the value of fiat currencies. This makes them suitable for retail payments, remittances, payroll, and digital commerce.
The UAE’s dirham-backed stablecoin
The UAE has taken an early and structured approach to regulating stablecoins.
AE Coin became the country’s first fully licensed dirham-backed stablecoin after receiving final approval from the Central Bank of the UAE in December 2024. Each AE Coin is backed one-to-one by UAE dirhams held in regulated local banks and is subject to ongoing audits.
Unlike global stablecoins linked to the US dollar, AE Coin is designed specifically for domestic use and mirrors the value of the dirham.
Users access AE Coin through the AEC Wallet, powered by Al Maryah Community Bank. Registration is linked to UAE Pass, and funds are converted directly from local bank accounts. Payments are executed through blockchain-based smart contracts, which automate transfers and make transactions final once completed.
Under current UAE regulations, only dirham-backed stablecoins are authorised for everyday payments, while other cryptocurrencies remain largely confined to trading and investment platforms.
Why it matters for residents
For consumers, stablecoins introduce a different way money behaves.
Transfers can settle in seconds rather than days. Payments can function continuously, including weekends and public holidays. Remittances can bypass multiple intermediaries, potentially lowering costs. Digital services can be automated through programmable payments.
For businesses, stablecoins offer faster settlement, improved cash flow, and reduced friction in cross-border transactions. For banks and regulators, they provide a framework for digital payments that remains under formal oversight.
Globally, stablecoins are increasingly viewed not as speculative instruments, but as financial infrastructure. They are being tested for payroll, merchant payments, treasury operations, and international settlement.
For the UAE, the introduction of a regulated, dirham-backed stablecoin places the country firmly within this global transition. For residents, it signals that digital money is moving beyond trading apps and into wallets, shops, and payment systems used in daily life.
