RAKBank has received in-principle approval from the Central Bank of the United Arab Emirates (CBUAE) to issue a new UAE dirham stablecoin. According to Raheel Ahmed, group CEO, this progress represents an important milestone in the digital assets journey of the institution. Thus, the bank is preparing to launch a payment token fully backed by the local currency very soon.
This digital asset will be backed in a 1:1 ratio by dirham deposits held in segregated and regulated accounts. Additionally, the entity ensured that the token will be governed by audited smart contracts with real-time reserve attestations constantly. Therefore, the project seeks to guarantee maximum transparency and trust for all users of the financial system. RAKBank thus leverages its previous experience allowing retail customers to trade crypto assets through regulated partners.
On the other hand, the initiative marks a new phase in the technological strategy of the bank based in Ras Al Khaimah. Likewise, this move responds to the growing demand for financial solutions that use blockchain technology safely. Hence, the entity seeks to modernize domestic payments and improve cross-border efficiency notably. The bank must now satisfy final operational conditions before beginning any live issuance.
A robust infrastructure to lead the digital economy in the Middle East
The United Arab Emirates has built a multi-pillar regulatory framework that includes various government agencies. The CBUAE, along with Dubai’s Virtual Assets Regulatory Authority, have established clear rules for digital service providers today. In this way, dirham-referenced payment tokens seek to support the federal government’s digital economy initiatives effectively. This legal structure attracts global and local players alike to the regional ecosystem.
Within this competitive landscape, the race for stablecoin dominance is no longer limited to crypto-native companies. Telecom giant e& is also piloting a regulated currency under the AE Coin brand currently. Nevertheless, RAKBank differentiates itself by being a traditional banking institution adopting digital innovation with official backing. Therefore, the integration of these assets into real commercial flows seems to be increasingly closer.
Will the digital dirham manage to displace global stablecoins in the region?
However, open questions remain regarding the network infrastructure that RAKBank’s new token will utilize. It is not yet clear how interoperability with existing global stablecoin rails in the market will look. As a result, mass adoption will depend on price incentives and integrated products for end consumers finally. Regulators are closely watching how federal rules will interact with the established free trade zones.
Finally, the success of this UAE dirham stablecoin will depend on its utility in remittances and corporate treasury flows. Ras Al Khaimah is positioning itself as a specialized hub for Web3 through initiatives like RAK DAO. Thus, the ecosystem is expected to attract more artificial intelligence and gaming companies to the country soon. The market looks forward to details regarding the technical implementation of this ambitious banking project.
