UAE Aims to Launch Digital Dirham by 2025, Revolutionizing Financial Transactions
2min read The United Arab Emirates (UAE) has set its sights on rolling out the digital dirham, its central bank digital currency, by the fourth quarter of 2025. This ambitious project is part of the UAE's broader Financial Infrastructure Transformation Program, which aims to integrate blockchain technology into cross-border transactions and remittances. The digital dirham is expected to bring significant innovations to the financial ecosystem, enhancing the efficiency and security of digital transactions within the region.
Central Bank of the UAE Governor Khaled Mohamed Balama highlighted the potential benefits of the digital dirham, stating that it could improve financial stability and help combat financial crime. The blockchain-based currency is anticipated to enable the development of innovative digital products, services, and new business models while reducing costs and increasing access to international markets. Both the digital dirham and its physical counterpart will be accepted as a payment method in all payment channels, ensuring seamless integration into the existing financial system.
The digital dirham has also undergone a rebranding, with the first letter of the dirham serving as its international symbol, accompanied by two horizontal lines representing the currency’s stability. This design is inspired by the UAE flag, symbolizing the country's commitment to stability and innovation.
In June 2024, the Central Bank of the UAE approved a licensing framework for regulating stablecoins. This framework clarified the issuance, licensing, and supervision of payment tokens backed by the UAE dirham. Following this approval, stablecoin issuer Tether announced plans to launch a dirham-backed stablecoin in collaboration with local partners phoenix Group and Green Acorn Investments. This collaboration aims to establish a fully-backed digital representation of the UAE dirham currency.
Other players have also joined the race to create a dirham-backed stablecoin. In October 2024, a company called AED Stablecoin received in-principle approval for issuing a regulated dirham-pegged stablecoin in the UAE. Additionally, The Open Network (TON) announced that Tether’s dirham-pegged stablecoin will be launched on its blockchain network.
The UAE's commitment to digital transformation is evident in its various initiatives aimed at enhancing innovation and technology. The Abu Dhabi Government, for instance, has unveiled a digital strategy for 2025-2027, allocating significant funds to support technological advancements. This strategy aligns with the broader goals of the Digital Dirham, emphasizing the importance of digital currencies in the future of finance.
In summary, the UAE's plan to launch the digital dirham by the fourth quarter of 2025 is a significant milestone in the country's journey towards digital transformation. This initiative, backed by robust legal frameworks and technological advancements, is set to revolutionize the financial landscape, making transactions more efficient, secure, and accessible. The digital dirham will not only benefit the UAE's economy but also position the country as a global leader in financial innovation.
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