The UAE has witnessed a significant uptick in stablecoin usage in 2024, making it a pivotal year for the digital currency sector.
The first half of the year saw stablecoin transactions reaching over $9.8 billion, marking a 55% increase from $6.3 billion in the same period last year, according to the latest report by Chainalysis.
These digital assets now represent the largest share of the UAE’s crypto activities at 51%, surpassing traditional cryptocurrencies like Bitcoin and Ether.
“Stablecoins have already done impressively well through the first half of the year,” said Arushi Goel, Head of Middle East & Africa Policy at Chainalysis. “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.”
Despite the dominance of large transactions, retail transfers make up 93% of the volume, indicating a vibrant market for retail investors using stablecoins for trading.
Centralised exchanges (CEXs) are the primary platforms for these transactions, with 78% of stablecoin transfers occurring there, contrasting with 47% of overall crypto transactions.
“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,” Goel added. “As the crypto ecosystem has demonstrated time and time again, the potential for ongoing innovation and transformation of the financial ecosystem can be unprecedented.”
The UAE’s stablecoin market is dominated by dollar-pegged options like Tether (USDT), which accounted for 61% of transactions. The introduction of Dirham-backed stablecoins, such as the AE coin, could further diversify and enhance the market, potentially impacting remittances, eCommerce, and more.