First stablecoins gain DFSA approval in Dubai
The Dubai Financial Services Authority (DFSA), the financial regulatory agency of the Dubai International Financial Center (DIFC), a special economic zone, has approved two stablecoins under its crypto regulatory framework.
The two stablecoins, USD Coin (USDC) and EURC, are both issued by blockchain-focused financial services firm Circle. While USDC is a U.S. dollar-backed stablecoin, EURC is a euro-backed stablecoin.
In a press release published on the Circle website on Feb. 24, the company announced details regarding the approval. The stablecoins are the first to be recognized and approved by the DFSA.
Stablecoin integration
The development means that firms based in the DIFC are now free to integrate either stablecoin into digital asset applications and products focused on areas such as payments and treasury management.
A number of Circle executives took to social media to comment on the development. Circle Co-founder and CEO Jeremy Allaire outlined on X that the approval means that financial institutions in Dubai “are now able to transact in markets with USDC and EURC.” In legally recognizing the two stablecoins, Allaire pointed out that the DFSA had joined regulators in the European Union (EU) and Canada.
Last Summer, Allaire announced that Circle’s stablecoins complied with the EU’s Markets in Crypto Assets (MiCA) regulation. In December, Circle became the first stablecoin issuer to meet Canadian listing regulations.
Dante Disparte, Circle’s chief strategy officer and head of global policy, pointed out that a trend is emerging requiring the pre-clearing of stablecoins prior to them entering into circulation or gaining regulatory approval. “In always-on finance, reciprocity is key,” he added.
Meanwhile, the firm’s EU Strategy & Policy Director, Patrick Hansen, underscored the significance of the approval. Hansen pointed to the fact that the DIFC is home to 6,000 registered entities, including 800 authorized financial firms.
An ‘edge’ over Tether
Eugene Cheung, Chief Institutional Business Officer at Hong Kong-based digital asset platform OSL, said that the approval was “massive for institutional adoption,” while giving Circle an “edge” over Tether within the $157 billion stablecoin market.
While Circle has always taken a regulatory-compliant approach, competitor Tether has struggled with compliance. In Europe, 10 companies have been approved to issue stablecoins under MiCA regulations, but Tether is not among them. This has led to a number of exchanges delisting Tether’s USDT in Europe.
The DIFC was first established in 2004. The economic free-zone caters to firms operating within the Middle East, South Asian and African regions. The number of businesses registered within the free zone has increased by 25% since 2023.
In November 2022, the DIFC recognized Bitcoin (BTC), Ethereum (ETH) and Litecoin (LTC). The following year, it added Toncoin (TON) and Ripple’s XRP, together with ZETA, the native token of the ZetaChain network.
In 2024, the DFSA amended its crypto regulations to allow foreign funds to invest in recognized crypto tokens, while enabling domestic qualified investor funds to invest in unrecognized tokens.
Although the regulatory approach taken by the authorities in Dubai accommodates stablecoins, algorithmic stablecoins are prohibited.
