The UAE announces the first cryptocurrency backed by the dirham
In a response to the United States' $125 billion cryptocurrency sector, the United Arab Emirates has just announced the world's first stablecoin backed by the Dirham
The UAE's evolved policy framework will launch a Dirham-backed stablecoin, the first global attempt to break into the $125 billion market dominated by US dollar-backed stablecoins.
DRAM, the first Dirham-backed stablecoin, was launched early this week by Distributed Technologies Research Ltd. (DTR), a 10-month-old decentralised finance (DeFi) startup founded by former SoftBank top executive Akshay Naheta. DTR plans to use the UAE's more liberal approach to cryptocurrencies and the Web3 ecosystem to gain a single-digit market share.
Stablecoins, cryptocurrencies connected to a fiat currency, financial instrument, or exchange-traded commodity, enable low-cost cross-border transfers.
Popular stablecoins like Tether (USDT), USD Coin (USDC), and PayPal USD (PYUSD) have a market valuation of over $125 billion.
Manhar Garegret, Country Head – India and Global Partnerships at Liminal, a wallet infrastructure and custody solutions platform, told Arabian Business that the launch of Dirham-backed stablecoin shows that the digital asset market in the region is maturing and ready for the next phase of growth due to evolved regulatory frameworks.
“The UAE market has already surprised us with their commitment to become leaders in digital assets, so it is not surprising to see such highly innovative and simple-to-use Web3 products emerging from the nation,” Garegret remarked.
DRAM launch a turning point for UAE digital assets
Crypto consultancy Metamorph CEO Satyandre Yadav called Dirham-backed stablecoin's debut a turning point for the UAE digital asset ecosystem.
He said the stablecoin market is one of the most established parts of the crypto business and the most popular use case since it allows users to transfer monetary value cheaply.
Yadav said the move will localize the UAE's digital asset market and reduce its dependence on USDT and USDC.
Due to the region's favorable legal environment, industry analysts expect DRAM, the new local currency-linked stablecoin, to succeed.
They also predicted that popular use cases will increase as crypto rules spread across more locations.
Dirham-linked stablecoin for low-cost UAE cross-border payments.
Stablecoins' main benefit, according to Garegret, is low-cost cross-border transfers.
JP Morgan estimates that firms move $23.5 trillion across borders annually. These large quantities incur $120 billion in transaction fees yearly, he noted.
Trapped liquidity, delayed settlements, and foreign currency conversions complicate this procedure.
Stablecoins provide frictionless transactions with unsurpassed security and traceability on a distributed ledger system.
Garegret said that regulated and compliant custody solutions providers may readily handle these transactions.
DTR wants a head start to corner single-digit market share soon.
DTR wants to gain a single-digit stablecoin market share for DRAM.
DTR founder Akshay Naheta said the business offers an enticing option for dollar-based stablecoin holders to be in a dollar-linked currency. It has a brighter macroeconomic outlook than the dollar.
All DRAM tokens will be backed by 3.6725 Dirhams ($1).
DTR will license its stablecoin technology to Hong Kong-based DRAM Trust, which will retain token reserves.
Most worldwide decentralized exchanges offer the cryptocurrency, with centralised exchanges expected to follow.
DTR may first produce $10 million DRAM coins.
Industry studies suggest stablecoins transacted $11 trillion, compared to Visa's $11.6 trillion.