AED-Backed Stablecoins Could Boost UAE’s Global Financial Influence, Expert Says
Dirham-linked digital currencies could support cross-border trade, increase demand for local financial assets and strengthen the UAE’s position in international finance, according to a digital assets executive.
The UAE could strengthen its position in the global financial system by expanding the use of stablecoins backed by the dirham, as digital currencies increasingly influence international payments, government debt markets and cross-border commerce.
Andrew Forson, president of DeFi Technologies, believes that AED-backed stablecoins could offer businesses and financial institutions an alternative to dollar-dominated digital currencies. Their adoption could also help support demand for UAE-denominated financial assets and reinforce the country's monetary independence.
Stablecoins and government debt markets
Stablecoins are digital assets designed to maintain a relatively stable value by being linked to currencies or other assets. Many major stablecoins are pegged to the US dollar and backed by reserves that can include short-term government securities.
Forson noted that the rising adoption of reserve-backed stablecoins could boost demand for the underlying assets used to maintain their value.
. In the case of dollar-backed tokens, greater issuance can translate into additional purchases of US Treasury securities.
However, the widespread adoption of foreign-currency-backed stablecoins in other countries could pose challenges for their domestic currencies.
Is this conversation helpful so far?. If individuals and businesses increasingly rely on dollar-linked digital assets instead of domestic money, demand for their own currency could weaken.
Forson warned that large-scale adoption of dollar stablecoins outside the United States could allow these privately issued digital currencies to exert an influence resembling that of a parallel central banking system.
UAE's regulatory framework for digital currencies
The UAE has taken steps to establish rules for payment tokens and stablecoin-related activities. The Central Bank's Payment Token Services Regulation, which came into effect in 2024, introduced requirements covering areas such as issuance, conversion, transfers and the safeguarding of payment tokens.
According to Forson, clear regulations can help financial institutions adopt digital assets with greater confidence. He noted that regulatory certainty is particularly valuable for institutional transactions, although he believes market demand ultimately plays a decisive role in determining whether a stablecoin succeeds.
The challenge for policymakers is to maintain financial stability and consumer protection without creating unnecessary barriers that discourage innovation.
AED stablecoins could support international trade
The advantages of dirham-backed stablecoins could reach far beyond payments within the UAE.
. The UAE's position as a The advantages of dirham-backed stablecoins could reach far beyond payments within the UAE.
gateway connecting the Gulf, Africa and Asia could create opportunities for digital currencies to support international trade settlements, remittances and business payments.
An AED-linked stablecoin could provide international companies and traders with another option for conducting transactions connected to the UAE. Supporters believe this could help expand the use of the dirham in digital financial services while reducing dependence on dollar-based alternatives in certain transactions.
Forson suggested that a well-developed AED stablecoin could become an attractive digital payment option for international businesses choosing to operate or trade through the UAE.
However, the scale of adoption would depend on factors including accessibility, market liquidity, trust, regulatory requirements and the willingness of businesses to use the token for actual payments.
Global stablecoin market continues to expand
Stablecoins have become an increasingly important segment of the digital asset industry. The source report put the global stablecoin market's value above $300 billion in 2026, reflecting growing interest in blockchain-based payment and settlement systems.
The expansion of this market has also drawn attention to the relationship between digital currencies and government debt markets. A report from the Federal Reserve Bank of San Francisco, cited in the original coverage, indicated that demand for US Treasury securities from stablecoin issuers could approach $400 billion by 2030 if existing growth trends continue.
For the UAE, the opportunity lies in developing a competitive dirham-backed alternative that can attract users while maintaining confidence in the currency and its underlying reserves.
Balancing regulation with innovation
Forson believes governments should establish clear safeguards while allowing businesses to develop useful financial products. He cautioned that overly complex requirements and slow approval processes could limit adoption and reduce a jurisdiction's attractiveness to digital asset companies.
For the UAE, this means balancing effective oversight with an efficient regulatory environment that supports responsible innovation.
The long-term impact of AED-backed stablecoins will depend on their ability to gain practical use among businesses, financial institutions and consumers. If adoption grows, these digital assets could become another component of the UAE's expanding financial services ecosystem and support its ambitions as an international trade and investment hub.
END.
