UAE Approves Dirham-Backed Stablecoin for Institutional Use

Central Bank of the UAE has granted regulatory approval for the launch of a dirham-backed stablecoin designed specifically for institutional use within the country’s financial system. The digital asset, known as DDSC, has been authorized to operate on the ADI Chain blockchain, allowing it to be deployed across regulated payment and settlement infrastructure. This approval represents a significant step in integrating blockchain-based financial instruments into the UAE’s formal and supervised financial environment.

With the clearance in place, DDSC is set to become operational within institutional frameworks, supporting a range of financial activities such as payments, treasury management, and trade settlement. The initiative reflects the central bank’s approach to enabling innovation while maintaining regulatory oversight, particularly in areas where digital assets intersect with traditional financial operations.

Institutional Issuance Structure Anchors Trust

DDSC is issued by a consortium that includes IHC, Sirius International Holding, and First Abu Dhabi Bank. This issuance structure places the stablecoin firmly within the ecosystem of established financial and investment institutions. By involving entities with strong regulatory relationships and significant market presence, the project aligns the stablecoin’s deployment with existing compliance and governance standards.

The participation of a major banking institution alongside large investment groups positions DDSC as an institutional-grade digital asset rather than a retail-focused cryptocurrency. This structure is intended to reassure market participants that the stablecoin is backed by credible organizations and operates within clearly defined regulatory boundaries. As a result, DDSC is expected to appeal primarily to banks, corporates, and large financial entities seeking blockchain-based efficiencies without compromising compliance.

Designed for Payments, Treasury, and Trade Settlement

The stablecoin has been developed to facilitate institutional transactions within a blockchain-based framework. Its primary use cases include payments between institutions, internal treasury operations, and cross-border trade settlement. By leveraging distributed ledger technology, DDSC is expected to offer faster settlement times, improved transparency, and reduced operational friction compared to traditional payment rails.

Anchoring the stablecoin to the UAE dirham ensures price stability, which is a critical requirement for institutional adoption. This peg allows organizations to use the digital asset for transactional purposes without being exposed to the volatility typically associated with cryptocurrencies. The combination of a fiat-backed structure and central bank approval integrates the stablecoin into the broader monetary ecosystem rather than positioning it as a parallel or alternative system.

Integration Into the UAE’s Financial System

The approval of DDSC highlights the UAE’s broader strategy of incorporating digital currency infrastructure into its regulated financial system. By allowing a dirham-backed stablecoin to operate on a domestic blockchain network, the central bank is enabling innovation while maintaining oversight over monetary stability and financial integrity.

Operating on ADI Chain allows DDSC to be embedded into institutional systems that are already aligned with regulatory requirements. This integration is designed to support secure and compliant digital transactions, reinforcing the role of blockchain as an infrastructure layer rather than a disruptive force operating outside established frameworks.

Implications for the Regional Financial Landscape

The launch of DDSC for institutional use may set a precedent for other jurisdictions in the region considering regulated stablecoin frameworks. By combining central bank approval, established issuers, and a domestic blockchain network, the initiative demonstrates a model for how digital assets can be incorporated into national financial systems.

For the UAE, the move strengthens its position as a hub for financial innovation while preserving regulatory control. The stablecoin’s focus on institutional use suggests a measured approach that prioritizes stability, compliance, and practical utility over rapid retail expansion.

Overall, the approval and planned deployment of DDSC signal an important milestone in the evolution of digital finance in the UAE. By aligning blockchain technology with regulated financial activity, the initiative illustrates how stablecoins can function as an extension of existing monetary infrastructure, supporting institutional efficiency while adhering to supervisory standards.

The post UAE Approves Dirham-Backed Stablecoin for Institutional Use appeared first on CoinTrust.