AED Stablecoins Could Strengthen UAE's Financial Clout, Says Expert

(MENAFN- Khaleej Times) The rapid rise of stablecoins is no longer just a cryptocurrency story. It is increasingly becoming a question of monetary policy, government debt markets and the future of cross-border trade, according to a digital assets executive who believes the UAE is well positioned to benefit from the trend.

As countries around the world race to establish regulatory frameworks for digital currencies, the UAE's efforts to develop an ecosystem for dirham-backed stablecoins could strengthen demand for domestic financial assets, support trade flows and reinforce the country's role as a global financial hub.

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According to Andrew Forson, President of DeFi Technologies, stablecoins should be viewed not only as a payment innovation but also as a mechanism that influences government treasury markets.

“Stablecoins are backed by the shortest government treasuries on a 1 to 1 basis,” said Forson.“The more stablecoins that are minted, the more treasuries must be purchased to back them.”

His comments come as regulators globally grapple with the growing influence of dollar-backed stablecoins such as USDT and USDC, which have become dominant in digital asset markets.

“This absolutely increases demand for US treasuries,” Forson said of widespread adoption of dollar-backed stablecoins.“The risk is with USDC / USDT adoption increasing in a non-US country, the demand for local currency will fall.” He warned that“the stablecoin becomes like a shadow central bank.”

The discussion is particularly relevant for the UAE, which has introduced a regulatory framework governing payment token services and stablecoin issuance. The Central Bank's Payment Token Services Regulation, which took effect in 2024, established rules for issuing, converting, transferring and safeguarding payment tokens while promoting innovation and consumer protection.

While regulatory clarity remains important, Forson believes market adoption will ultimately determine success.

“It is helpful, important, but ironically, not necessary,” he said when asked about regulation.“For institutional rails, regulatory clarity is super helpful.”

The UAE's ambitions extend beyond domestic payments. Industry observers say an AED-backed stablecoin could support trade settlement and remittances across the Gulf, Africa and Asia, regions where the UAE serves as a major commercial gateway.

According to Forson, an AED stablecoin could offer“the independent internationally respected alternative to US stablecoins that many international players seek.” He added that it has the potential to become“the default digital currency for entities that choose to trade or operate out of the UAE.”

Global interest in stablecoins is accelerating. The stablecoin market exceeded $300 billion in value during 2026, while stablecoin issuers have become increasingly significant buyers of short-term government debt. The Federal Reserve Bank of San Francisco recently noted that stablecoin issuers' demand for US Treasury securities could nearly double to about $400 billion by 2030 if current growth trends continue.

For the UAE, proponents argue that local-currency stablecoins could help capture some of those benefits domestically. When asked whether AED stablecoins could support demand for dirham-denominated assets and strengthen monetary sovereignty, Forson's answer was unequivocal:“Yes.”

The executive also sees stablecoins becoming a foundational layer of the future financial system, particularly for cross-border transactions.

“Where exchange of value must occur quickly and internationally on a person-to-person basis, you will find adoption of stablecoins,” he said. He described them as“the great equaliser” for individuals and small businesses, adding that they provide access to“inflation mitigated internationally movable buying power.”

Looking ahead, Forson expects governments to compete to attract stablecoin activity much as they compete today for capital and financial services. However, he cautioned against excessive intervention.

“Countries and governments need to set the framework and get out of the way,” he said.“When governments get involved with too much regulation and too many requirements, it has the habit of killing off innovation, demand, and utilisation.”

His advice to UAE policymakers is simple:“Provide the minimum amount of regulation that provides maximal stability and process applications quickly. Speed and clarity are the biggest jurisdictional differentiators of favourability.”

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