As Bitcoin soars past the $75,000 threshold due to recent political changes, the UAE’s cryptocurrency market is experiencing a subtle yet significant transformation. Stablecoins have emerged as the preferred option for UAE investors, accounting for an impressive 51% of the nation’s crypto transactions. This shift underscores the increasing importance of stablecoins as a dependable digital asset in a fluctuating cryptocurrency environment.
In just the first half of 2024, stablecoin activity recorded a 55% increase compared to the previous year, with over $9.8 billion transacted through UAE services. An analysis of transaction sizes reveals the varied landscape of stablecoin investors in the UAE. Retail transfers (under $10,000) constituted a substantial 93% of transaction volumes, indicating a growing inclination among smaller investors. In contrast, larger transactions were distributed among professional ($10,000 to $1 million), institutional ($1 million to $10 million), and large institutional categories (over $10 million), representing 40%, 34%, and 20% of the stablecoin-backed value, respectively.
Regulatory Clarity Boosts Stablecoin Adoption
The recent Payment Token Services Regulation from the UAE Central Bank has played a crucial role in facilitating wider stablecoin adoption. By providing clear guidelines regarding the issuance, custody, and conversion of digital payment tokens, this new regulation is set to enhance the appeal of stablecoins for investors at all levels. “The regulation offers clear direction, creating a favorable environment for the engagement of all types of investors,” remarked Arushi Goel, Head of Middle East & Africa Policy at Chainalysis.
