The year 2024 has marked a significant upswing for stablecoin usage in the United Arab Emirates (UAE), propelled by evolving regulations and increased institutional adoption. According to recent data, the total stablecoin volume transacted in the UAE reached US$9.8 billion in the first half of 2024, representing a 55% increase over the US$6.3 billion recorded during the same period in 2023. This growth, largely driven by recent regulatory advances from the Central Bank of the UAE (CBUAE), has seen stablecoins capture a dominant share of the nation’s crypto landscape, overtaking both Bitcoin and Ether in transaction volume.
Stablecoins have rapidly become the most prominent digital assets in the UAE, accounting for 51% of all crypto activity, surpassing the traditional appeal of Bitcoin (19%) and Ether (9%). The CBUAE’s recent issuance of the Payment Token Services Regulation has played a central role in this shift by establishing clear guidelines for the handling, custody, and conversion of payment tokens within the UAE. This development has ignited interest across financial and corporate sectors, signaling a potential expansion of stablecoin applications.
“Stablecoins have already done impressively well through the first half of the year. And with the Central Bank of the UAE (CBUAE) releasing its Payment Token Services Regulation, which clarifies the rules for issuing, custodying and converting payment tokens in UAE, this would potentially pave the way for broader participation and innovation,” noted Arushi Goel, Head of Middle East & Africa Policy at Chainalysis.
A breakdown of transaction sizes reveals that professional and institutional investors play a central role in driving stablecoin volume, with retail transactions under $10,000 constituting only 6% of the value but 93% of the transaction volume.
Meanwhile, large transfers remain a key part of the stablecoin ecosystem, with professional-sized transactions ($10K to $1M) and institutional-sized transfers ($1M to $10M) making up 40% and 34% of the total, respectively. These figures suggest that while high-net-worth transactions dominate value, retail investors maintain significant activity in stablecoin trading, likely as an efficient means to engage in broader digital asset markets.
Further insights reveal that stablecoin transactions are primarily conducted through centralised exchanges (CEXs), which handled 78% of all such transfers in H1 2024. This trend aligns with broader global preferences, as users increasingly seek regulated platforms that simplify the on-ramp process. “In line with global trends, stablecoins are helping expand the crypto user base, with centralised exchanges serving as a convenient and regulated on-ramp for individuals and businesses who have not traditionally utilised virtual assets,” added Goel. “Merchant services are growing, and both people and businesses are now using centralised exchanges for business payments and remittances. The significant proportion of stablecoin activity on CEXs suggests they are being increasingly used for settlements and transfers. This contrasts with decentralised exchanges (DEXs), where activity is typically centred around trading.”
US dollar-pegged stablecoins are leading the market in the UAE, reflecting the dirham’s own peg to the dollar. Tether (USDT) dominates the stablecoin landscape with a 61% share of transactions, followed by USD Coin (USDC) and Dai (DAI), the latter distinguished by its algorithmic stability model.
The market’s direction could take another turn with the anticipated launch of the AE coin, a dirham-backed stablecoin that has gained preliminary approval from the CBUAE. “The concentration of stablecoin investments in the UAE around the world’s most popular variants indicates that a lower bar to entry and more frictionless experience helps draw in investors. It will therefore be very interesting to see the market reception to Dirham-backed stablecoins, which is expected to become a reality, with the AE coin receiving in-principle approval from the Central Bank,” noted Goel. “Once these gain widespread market acceptance, among both institutions and consumers, the benefits they bring could be truly impressive. Remittances, eCommerce transactions, real estate purchases, the payment of government services, and tokenized assets are just a few of the high impact use cases.”
The UAE’s regulatory clarity, coupled with the rising appeal of stablecoins, suggests that the nation is on course to become a pivotal hub for stablecoin innovation in the region.
