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UAE to Launch Dirham-Backed Stablecoin to Boost Digital Payments

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  • Dirham-backed stablecoin to be regulated by UAE Central Bank
  • Stablecoin set to boost UAE’s digital infrastructure and fintech growth
  • ADI blockchain will ensure scalable, secure global distribution for stablecoin

Abu Dhabi’s International Holding Company (IHC), ADQ and First Abu Dhabi Bank (FAB) have announced the launch of UAE Dirham-backed stablecoin. If approved, the stablecoin will be issued by FAB and regulated by the UAE Central Bank (CBUAE). This stablecoin seeks to revolutionize payment systems and boost UAE’s digital finance sector.

The stablecoin will run on the ADI blockchain which was created by the ADI Foundation. The blockchain enables secure and scalable blockchain-based payments. The stablecoin’s regulatory approval enables it to facilitate digital payments, machine-to-machine transactions and AI powered applications for businesses and individual users.

The stablecoin will link traditional finance with blockchain technology. Moreover, it offers a stable and dependable option compared to other volatile cryptocurrencies. Moreover, the stablecoin seeks to facilitate seamless and efficient global digital payments.

Dirham-Backed Stablecoin Sets UAE on Crypto Dominance

The UAE Central Bank has established plans to promote digital currency adoption. In March 2023, the central bank launched the “Digital Dirham” initiative , which demonstrates the country’s commitment to digital economic growth. Moreover, the central bank introduced stablecoin regulations in 2024.

ADQ’s Managing Director and Group CEO, Mohamed Alsuwaidi stated that the stablecoin launch is an important step in the growth of UAE’s digital economy. He stated that the stablecoin provides a secure and efficient solution which supports UAE’s digital infrastructure. The initiative aims to strengthen UAE’s position as a global financial technology hub.

Hana Al Rostamani, Group Chief Executive Officer of FAB, emphasized on the potential of the stablecoin. She stated that the stablecoin could transform blockchain-based payments for businesses and consumers across the UAE. The new stablecoin could create innovative opportunities in sectors such as finance, commerce, and trade.

Impact of Dirham-Backed Stablecoin

The stablecoin will operate on the ADI blockchain. The ADI Foundation has partnered with more than 20 countries to develop a compliant blockchain payments network. The strategic partnerships aim to expand the stablecoin’s presence in the global market.

The new digital currency seeks to deliver secure, transparent and scalable transactions. The stablecoin expands digital currency markets and introduces a more secure, stable and accessible payment solution to consumers and institutions.

The stablecoin is expected to strengthen UAE’s crypto  leadership position in the region.

Sonic Labs Drops USD Algorithmic Stablecoin Plans, Eyes UAE Dirham Launch

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  • Sonic Labs shifts focus to a UAE dirham-backed stablecoin, avoiding algorithmic risks.
  • The UAE’s digital dirham rollout in 2025 influences Sonic Labs’ new stablecoin strategy.
  • Regulatory concerns led Sonic Labs to abandon USD stablecoin and opt for UAE dirham.

The blockchain technology firm Sonic Labs dropped its US dollar stablecoin initiative to focus on developing a stablecoin linked to the United Arab Emirates dirham. Sonic Labs revealed its business shift on March 28, 2025 which coincides with the UAE’s forthcoming digital dirham launch in late 2025. 

Co-founder Andre Cronje confirmed this pivot on X by explaining that U.S. regulatory obstacles led to their decision. This strategic shift demonstrates the general trend of cryptocurrency organizations adapting their operations based on changes in worldwide financial law enforcement.

A week earlier the USD-based stablecoin with an annual percentage rate ranging from 19% to 23% was unveiled. However, he quickly reversed course, stating, “We will no longer release a USD-based algorithmic stablecoin.” Instead, Sonic Labs will introduce a “mathematically bound numerical Dirham” settled in USD. The UAE plans to introduce its blockchain-based central bank digital currency (CBDC) while experiencing a positive environment for dirham-backed digital assets.

UAE’s Digital Dirham Sparks Industry Shift

Governor Khaled Mohamed Balama of the UAE’s Central Bank plans to release its digital dirham currency during the fourth quarter of 2025. According to the Khaleej Times, the director of the Central Bank of the UAE explained how the blockchain-powered currency strengthens financial stability and tackles financial crimes. 

To extend its reach, the digital dirham will operate parallel with physical cash in every payment channel. The development has prompted companies like Sonic Labs to align with their offerings with the UAE’s progressive stance on digital finance.

Furthermore, Sonic Labs decided to enter the stablecoin market in response to UAE stablecoin regulation for 2024 which allows AED-backed stablecoins to be accepted as payment methods for goods and services. The authority at the Central Bank restricts algorithmic stablecoins while letting firms create innovative solutions under specific regulations. Tether and Zand Digital Bank joined the expansion of dirham-based stablecoin options in the region indicating an upward trend for digital currencies that use the dirham currency.

Regulatory Hurdles Reshape Stablecoin Landscape

The transition from USD-based algorithmic stablecoins occurred because of increasing regulatory oversight in the United States and Europe. Lawmakers in the US continue developing STABLE Act legislation that limits algorithmic stablecoins for two years while enforcing issuers to maintain 1:1 reserve ratios. The European Union enacted the MiCA regulations to ban stablecoin models after Terra collapse depleted billions in 2022. Sonic Labs chose a different strategy to avoid regulatory barriers by creating a stable and regulatory-compliant platform.

Moreover, Cronje’s dirham-based stablecoin solves the problems of algorithmic designs by using mathematical principles to establish its value instead of market algorithms. The strategy combines regulatory adherence to upcoming guidelines with support for UAE crypto-friendly policies.