Big banks rush into stablecoins

Major banks and fintech firms are entering the stablecoin space, aiming to carve out a share of the growing cross-border payments market, long dominated by crypto firms like Tether and Circle, the Financial Times reports. Institutions including Bank of America, Standard Chartered, PayPal, Revolut, and Stripe are moving into the sector as regulatory frameworks take shape and transaction volumes rise.

The market is heating up fast: Stablecoin transactions hit USD 710 bn last month, up from USD 521 bn a year prior. The number of unique stablecoin wallets also grew 50% to 35 mn, according to Visa data. Companies are also finding practical use cases — SpaceX, for example, uses stablecoins to move Starlink revenues from Argentina and Nigeria, while AI firm ScaleAI pays international contractors in digital tokens.

More developments are underway: Stripe dropped USD 1.1 bn to acquire stablecoin startup Bridge, and PayPal is planning to expand its PYUSD rollout this year. Meanwhile, the EU has implemented compliance regulations for stablecoins, while the UK is gearing up for its own regulations, and US politicians are discussing stablecoin-related bills. Bank of America CEO Brian Moynihan acknowledged the shifting landscape, saying, “If they make that legal, we will go into that business.”

Regulations are taking shape here at home too: The Financial Services Regulatory Authority issued a regulatory framework for the issuance of stablecoins in the ADGM last year, after which the Central Bank of the UAE granted final approval for the launch of AE Coin, making it the country’s first AED-pegged stablecoin.

EMs could become leaders in this space: The real momentum for stablecoins is in emerging markets, where currency risk and weak banking infrastructure make them a preferred option for commodities, agriculture, and shipping. In Western markets, however, their role is “not as obvious,” Index Ventures’s Martin Mignot said.

Stablecoins still carry risks: Analysts warn that stablecoins function as digital IOUs rather than true cash, meaning users are exposed to the financial health of the issuing company. “Essentially what the brand of the stablecoin tells you is that this is who the issuer is,” fintech consultant Simon Taylor said. “Therefore, because the issuer is that organisation, your credit risk is X or Y. That’s not something you do with the USD.”

MARKETS THIS MORNING-

Asian markets broke away from the losing streak on Wall Street, with most markets up in trading as of dispatch. South Korea’s Kospi and Japan’s Topix were both up, while the Nikkei was flat in early trade. On Wall Street, futures are pointing to a stronger open after another volatile day in trading as the Trump administration’s whispering trade policy continued to breed uncertainty among investors.

THE CLOSING BELL-

The DFM fell 0.3% yesterday on turnover of AED 1.3 bn. The index is down 0.7% YTD.

In the green: Agility The Public Warehousing Company (+5.1%), ENBD Reit (+4.9%) and National General Ins. (+4.0%).

In the red: National International Holding Company (-9.8%), Dubai Refreshment Company (-9.8%) and Al Ramz Corporation Investment and Development (-6.2%).

Over on the ADX, the index fell -0.2% on turnover of AED 1.7 bn. Nasdaq Dubai was down -0.4%, and -0.9% YTD.

CORPORATE ACTIONS-

Tecom Group's shareholders approved a dividend of AED 400 mn (8 fils per share) for the second half of 2024, according to a bourse disclosure (pdf). This brings the total dividend for 2024 to AED 800 mn, consistent with the company’s dividend policy in effect through mid-2025.

First Abu Dhabi Bank’s (FAB) board approved issuing up to USD 10 bn in non-coverable debt instruments — either bonds, sukuk, or other securities — as well as an additional tier 1 bond or sukuk issuance of up to USD 3 bn to use for capital purposes, and a tier 2 or sukuk issuance of up to USD 3 bn, according to a disclosure (pdf) to the ADX. It also approved distributing AED 8.3 bn from its earnings for 2024.

REMEMBER- FAB has already been busy this year. The lender issued USD 750 mn in senior unsecured notes as part of its USD 20 bn EUR medium-term note program, and a USD 600 mn five-year sukuk issuance.