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Cryptocurrency: UAE announces first-ever Dirham-backed stablecoin in challenge to US $125bn market

DTR is eyeing a head start for DRAM by targeting to corner a single-digit share in the stablecoin market in the near term

Cryptocurrency: UAE announces first-ever Dirham-backed stablecoin in challenge to US $125bn market

The UAE is set to trigger a major milestone in the global cryptocurrency market, with its evolved policy framework for the sector providing the launch ground for issuing a Dirham-backed stablecoin, a move widely seen as the first attempt globally to make a dent in the $125 billion market, currently dominated by US dollar-backed stablecoins.

The first Dirham-backed stablecoin, DRAM, launched early this week by Distributed Technologies Research Ltd (DTR), a 10-month-old decentralised finance (DeFi) startup founded by former SoftBank top executive Akshay Naheta, plans to leverage the more liberal approach of the UAE to cryptocurrencies and the Web3 ecosystem to make an impact in the market and capture a single-digit share in the near-term.

Stablecoins, which are cryptocurrencies intrinsically tied to an underlying asset such as a fiat currency, financial instruments or exchange-traded commodities, facilitate cross-border payments at an exceptionally low cost.

Tether (USDT), USD Coin (USDC) and the recently introduced PayPal USD (PYUSD) are among the most popular stablecoins, with an estimated combined market cap of around $125 billion.

“The launch of Dirham-backed stablecoin shows that the digital asset market in the region is entering a more mature phase and is ready for the next phase of growth on the back of evolved regulatory frameworks,” Manhar Garegret, Country Head – India and Global Partnerships at Liminal, a wallet infrastructure and custody solutions platform, told Arabian Business.

“The UAE market has already surprised us with their commitment to become leaders in the digital assets space and it is not surprising to see such highly innovative and simple-to-use Web3 products emerging from the nation,” Garegret said.

Manhar Garegret, Country Head – India and Global Partnerships at Liminal
Manhar Garegret, Country Head – India and Global Partnerships at Liminal

DRAM launch a watershed moment for UAE digital asset industry

Satyandre Yadav, CEO of Metamorph, a crypto consultancy, said the launch of Dirham-backed stablecoin is a watershed moment for the UAE digital asset industry.

“The stablecoin market is one of the most mature segments of the crypto industry and has been the most popular use case as it empowers users to transfer monetary value at a very low cost,” he said.
Yadav said the move will make the digital asset economy in the UAE more localized and less dependent on foreign currency-based stablecoins such as USDT and USDC.

Industry experts said the newly launched, local currency-linked stablecoin, DRAM, is expected to thrive owing to the fertile regulatory landscape in the region.

They also said as crypto regulations keep developing across more regions, the market will see a corresponding growth in the popular use cases as well. 

Dirham-linked stablecoin to facilitate cross-border payments of UAE users at exceptionally low cost

Garegret said the primary utility of stablecoins lies in their ability to facilitate cross-border payments at an exceptionally low cost.

“As per a JP Morgan report, globally, corporations shuffle approximately $23.5 trillion across borders each year. The associated transaction costs for these massive sums tally up to a staggering $120 billion annually,” he said.

This process is also plagued by issues like trapped liquidity, delayed settlements, and the need for foreign currency conversions.

“In this context, stablecoins offer a streamlined solution, enabling seamless transactions with unparalleled security and traceability on a distributed ledger technology.”

Garegret also stressed that these transactions can easily be facilitated through regulated and compliant custody solutions providers.

DTR eyeing a head start, to corner single-digit market share in near-term


DTR is eyeing a head start for DRAM by targeting to corner a single-digit share in the stablecoin market in the near term.

Akshay Naheta, DTR promoter, has reportedly said the startup created a very attractive alternative for anyone who has a dollar-based stablecoin to be in a currency that is linked to the dollar. and which has a better macroeconomic outlook than the greenback.

Every DRAM token will be backed by 3.6725 Dirhams, which is equivalent to $1.

DTR will licence its stablecoin technology to Hong Kong-based DRAM Trust, which will hold the reserves backing the tokens.

The token is already available on most global decentralised exchanges, with centralised exchanges likely to follow suit soon.

DTR is said to be planning to issue DRAM coins worth up to $10 million initially.

According to industry reports, stablecoins are estimated to have processed $11 trillion worth of volumes, compared to $11.6 trillion transactions processed by card payments network Visa.

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James Mathew

James Mathew, preferred to be addressed as James, assumes the role of India Correspondent at Arabian Business from New Delhi, bringing to the table a wealth of knowledge and expertise in economic, financial,...