A trio of major Abu Dhabi institutions, including the Emirate’s sovereign wealth fund, have teamed up to launch a new dirham-pegged stablecoin.
Abu Dhabi’s sovereign wealth fund ADQ, the United Arab Emirates’ largest bank, First Abu Dhabi Bank (FAB), and the massive conglomerate the International Holding Company, have partnered to launch the stablecoin, pending regulatory approval, the three companies said on April 28.
The trio said the stablecoin would be regulated by the UAE’s central bank and backed by the country’s currency, the dirham. It will also support use cases such as machine-to-machine and artificial intelligence.
The goal is to place the UAE at the “forefront of global blockchain innovation,” while also strengthening the digital infrastructure, according to ADQ.
If it gets the nod from regulators, the new stablecoin will operate on the ADI blockchain, created by the ADI Foundation, a nonprofit organization dedicated to helping established financial systems and governments advance and adopt blockchain technology.
Established in 2018, ADQ is a sovereign wealth fund focused on critical infrastructure and global supply chains. Meanwhile, IHC is one of the UAE’s largest investment firms and conglomerates with a market value of over $243 billion that has ties to the ruling family of Abu Dhabi, the country’s capital.
FAB is the largest bank in the UAE, formed in 2017 through a merger between First Gulf Bank and National Bank of Abu Dhabi.
Countries line up to challenge US dollar stablecoins
Other countries have also announced plans to launch stablecoins backed by currencies other than the US dollar.
The market cap of US dollar-denominated stablecoins crossed $230 billion in April, an increase of 54% since last year, with Tether (USDT) and USDC (USDC) dominating 90% of the market.
Related: UAE stablecoin issuer gets nod from central bank
A Russian finance ministry official has floated a plan for the country to develop its own stablecoin after a freeze on wallets linked to the sanctioned Russian exchange Garantex by US authorities and stablecoin issuer Tether.
However, an April 23 report from investment banking giant Citigroup predicts the stablecoin supply will remain US dollar-denominated, with non-US countries promoting national or central bank digital currency.
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