Tether plans launch of dirham-pegged stablecoin
Tether, the issuer of the USDT stablecoin, has teamed up with local partners in the United Arab Emirates (UAE) in order to launch a dirham (AED)-backed stablecoin.
In a statement published to the firm’s website on Aug. 21, Tether outlined that the stablecoin is being launched in partnership with Dubai-based technology conglomerate Phoenix Group and Green Acorn Investments, a company that describes itself as “a socially responsible investment firm dedicated to supporting critical sectors and supporting the generation of sustainable wealth and financial literacy.”
Fully backed by AED reserves
The stablecoin issuer outlined that each token will be “fully backed by liquid UAE-based reserves.” Tether further maintained that the back-end management of the new token will adhere to the firm’s “transparent and robust reserve standards,” and that “every Dirham-pegged token is tied to the value of the AED, providing stability and confidence in its value.”
Tether dominates the stablecoin market where USDT accounts for $117 billion, against a backdrop of an overall stablecoin market valued at $169 billion.
Perennial skeptics
The company has perennially faced criticism for a lack of transparency relative to the backing of its USDT stablecoin, given its policy of providing attestation reports instead of fully comprehensive audits from a top-tier auditing firm.
One of the firm’s critics, the pseudonymous X account @OccamiCrypto took to the social media platform to provide its reaction to this most recent development, stating:
"This Tether UAE stablecoin 'launch' will likely be as real as Tether’s promised audit and real time reserve reporting." The Tether critic went on to claim that the announcement is nothing more than "Tether spin," and that Tether has never attempted to become regulated in any market and that nothing would come of it.
Another Tether critic, freelance journalist Jacob Silverman, commented on the development on X, stating:
”Russian businessmen in UAE must be rejoicing.”
His comment is suggestive of a common assertion that Tether is being used to facilitate the circumvention of sanctions.
According to the firm’s press release, it believes that the product will enable users locally to access the benefits of the AED in digital form. The company claims that it will “streamline international trade and remittances, reduce transaction fees, and provide a hedge against currency fluctuations, thus playing a crucial role in the financial ecosystem of the UAE and beyond.”
Tether’s partner Phoenix Group has been active in the crypto-sphere in recent times through mining. In December of last year, the company sealed a $380 million deal with Chinese mining equipment manufacturer MicroBT. Earlier that month, the company went public on the Abu Dhabi Securities Exchange (ADX).
On face value, this development appears positive. However, UAE-based crypto and blockchain lawyer Irina Heaver recently warned that tightening regulations within the UAE may shut down crypto payments within the country. Heaver specifically cited the use of USDT as being under threat, with the potential for stablecoin-based transactions to be prohibited as new rules are ushered in.
