Why does the UAE care about stablecoins?

For many in the region, stablecoins still sound like a far‑fetched gimmick — a tool reserved for crypto bros and late‑night traders. But if you’ve been paying attention to headlines in the UAE, they’re slowly creeping into much more of our day-to-day — stablecoins can now be used to settle government services fees and pay for flight tickets and taxi rides.

Some of you might think: Why would I want to pay for a flight ticket using stablecoins? Why is that a need? And the answer is: For many, it’s not a need. And that’s also not what building stablecoin infrastructure is about — the use cases for stablecoins stretch way beyond day-to-day retail usage.

The UAE has spent over a decade modernizing its financial infrastructure and creating a predominantly digital and cashless economy. While, yes, that’s helped streamline payments and make life easier for residents and citizens alike, the bigger picture is to become a global-facing economy that can interact with as many different players as possible, in the fastest and cheapest way possible.

The logical next step to achieve that? Building blockchain-based rails that could support cross-border transactions as well as offer optionality for people living in and visiting the UAE.

That’s why the UAE is on a major drive to create AED-backed stablecoins that can be used for trading, business treasury purposes, and even retail. AE Coin was the UAE’s first CBUAE-licensed stablecoin, with early adoption by Network International, 7X, Air Arabia, the Abu Dhabi Judicial Department, and Tawasul Taxis. Zand Bank secured approval for Zand AED, Rakbank received approval to launch its own stablecoin, while IHC, ADQ, and First Abu Dhabi Bank are also developing one.

**A quick primer for those who are unfamiliar: Stablecoins are a tokenized currency, backed 1:1 by liquid fiat reserves, whether that’s the USD, the AED, or another currency. Unlike BTC, whose value fluctuates based on market sentiment, stablecoins are linked to their fiat-denominated currency, offering more stability.

The current lay of the land

The UAE is currently building liquidity for blockchain-based payments and stablecoins, Economy and Tourism Department AI CEO and Dubai Blockchain Center CEO Marwan Alzarouni tells EnterpriseAM. “We’re scaling up that liquidity, but we’re doing so in a very gradual, measured way that also covers all of the technology and underlying infrastructure that is needed,” he explains.

The volume of stablecoins traded in the UAE across trade finance, remittances, and B2B settlement surged over 40% y-o-y in 2025, supported by a progressive regulatory landscape, CEO of decentralized finance trading platform DYDX and author of Arabian Crypto Charles D’Haussy tells EnterpriseAM.

“The market in the UAE is being activated by business first, while retail will follow after,” D’Haussy adds. How do businesses benefit from the use of stablecoins? “[Stablecoins] are really an infrastructural play that runs across many types of businesses,” Group Chief Strategy and Venture Officer at Fuze Serena Sebastiani tells us.

(Why should you to listen to Sebastiani? She led PwC’s fintech and digital asset platform for the Middle East for 15 years and has worked with regulators like the Virtual Assets Regulatory Authority, the Central Bank of the UAE, and the Saudi Central Bank.)

Crypto trading still accounts for around 60-65% of all use cases in the UAE, Sebastiani says, noting that other use cases are expanding. “We’re seeing more platforms and use cases for the AED-denominated stablecoins, but effectively it's still very early stages,” she adds.

B2B transactions are where stablecoins currently offer an immense value, experts tell us. “Stablecoins facilitate commercial trades, cross-border payments, cards, and collection in those countries where it's difficult to repatriate USDs or to get USD liquidity,” Sebastiani explains.

A workaround for FX volatility in foreign investment destinations?

The UAE’s foreign investment footprint is now massive. The likes of Adnoc, Taqa, DP World, Emirates, Etisalat, IHC, ADQ, and sovereign funds are present in dozens of developing markets — including countries with extreme political and financial instability. In countries like Egypt, Pakistan, Ethiopia, and post‑war Syria, USD access is volatile, banking rails are weak, and repatriating income can take months. Stablecoins are the workaround.

“Businesses like airlines have money stuck in places for 9-12 months, sometimes even longer, because it’s very difficult to repatriate USDs out because of a lack of liquidity,” Sebastiani explains. “Stablecoins give them that liquidity bridge to repatriate funds before they [lose value],” she adds.

It also makes the entire process of settling and trading goods more efficient, Alzarouni says, especially when taken with other digitization measures into account. “You transfer goods more swiftly, settle digitally, and complete the entire journey without friction,” Alzarouni explains, adding that integrating AI and digital trade platforms with those types of payment rails and infrastructure can make for a much smoother, faster end-to-end settlement journey for trade.

And there are more use cases for remittances and tourists

About 90% of the UAE’s residents are expats, and the UAE was the third-largest sender of remittances globally as of last year, according to Visa. But remittances come with high fees — the global cost is estimated at an average of 6.5%, Sebastiani says. Stablecoins lower that by 40%, she explains.

It’s not just about the cost but about efficiency, particularly in jurisdictions where legacy Swift networks falter, and transaction processes take around five days. “Remittances we facilitate via stablecoins only take about 20 minutes, instead of the usual five days,” Sebastiani notes.

That ease of access also makes the lives of tourists easier — if they have an AED-denominated stablecoin wallet or a card, they don’t need to exchange their money to AED and be subject to exchange rates, Sebastiani says. That’s especially important for places that are tourism- and conference-heavy like the UAE, she adds.

The caveats

There’s still an “illicit activity” stigma that needs to be overcome. “Stablecoins are much more traceable than [banknotes] or banking transactions,” Alzarouni says. While transactions are pseudo-anonymous, Alzarouni explains that we’re already seeing the emergence of “on-chain verifiable credentials with blockchain-based digital identities,” which allows transactions to happen fully on-chain.

SOUND SMART- Digital decentralized identities allow authorized third parties to verify a user's real-world identity once using cryptographic proof while protecting the user’s identity. That means there’s a know-your-customer (KYC) process involved, with smart contracts instantly reading those cryptographic attestations to verify compliance before executing a transfer.

The key here is interoperability and working with other jurisdictions to standardize the rules and regulations governing stablecoins, our sources tell us. “The UAE has its own role, but we’re also not an island,” Alzarouni says. “We have to work with the other jurisdictions, whether that’s Southeast Asia, the US, or Europe, when it comes to KYC/AML and due diligence,” he adds, referencing collaboration like Zand’s with Ripple’s USD-denominated stablecoin as helping build a mature ecosystem around that infrastructure.

AED-denominated stablecoins are still at very early stages of growth, but their rise, along with others, is increasingly helping the ecosystem mature and challenging the distribution of USD-denominated stablecoins, D’Haussy observes. And that’s needed, he says: “If your domestic financial system is built on someone else’s infrastructure — the USD, for example — you don’t have freedom. You’re not in control of anything,” he explains.

Currently, payment using stablecoins in the UAE is restricted to AED-backed stablecoins — and that’s done for a reason. “Currencies need to be sovereign,” Sebastiani says. “I think we will see more and more local currency-denominated stablecoins actually, and that will facilitate a lot of exchange between different currency-denominated stablecoins and will enable easier swaps instead of having to do on-ramp and off-ramp,” Sebastiani explains.