On April 29, 2025, three major sovereign entities in the UAE—International Holding Company (IHC), Abu Dhabi Development Holding Company (ADQ), and First Abu Dhabi Bank (FAB)—jointly announced the launch of an official stablecoin backed by the Dirham. This token not only receives full regulatory endorsement from the central bank but is also built on the self-developed ADI blockchain technology of the UAE, marking the first instance in the Middle East of a digital currency anchored by national credit entering the implementation stage. At a time when the cryptocurrency market capitalization exceeds $3 trillion, Abu Dhabi's action may reshape the global stablecoin competitive landscape.
I. Strategic Background: The Blockchain Cure for Oil Economy Transformation
1. Urgency of Economic Diversification
The UAE's oil reserves account for only 9% of the world's total, but the digital economy has reached $150 billion (2024 data). The Dubai Financial Market shows that financing for blockchain-related enterprises surged 240% year-on-year in 2024, with stablecoin-related projects accounting for 37%. The launch of the official stablecoin by Abu Dhabi is a key move in its "de-oilization" strategy in the "Vision 2030."
2. Competition for Geopolitical Financial Discourse Power
Faced with the competition pressures of Saudi Arabia's "Vision 2030" and Qatar's sovereign fund, Abu Dhabi has chosen stablecoins as a breakthrough point:
◦ Reconstruction of Payment Systems: The Dirham stablecoin can bypass the SWIFT system, establishing a blockchain-based cross-border clearing network, reducing cross-border payment costs by over 30%;
◦ Monetary Policy Innovation: Achieving precise fiscal subsidy deployment through smart contracts, reducing intermediary losses by 12% in the 2024 pilot.
◦ Digitization of Gold Assets: Plans to put $125 billion worth of central bank gold reserves on-chain, creating a "digital gold token" system.
II. Technical Architecture: Self-developed blockchain and regulatory paradigm innovation.
1. Breakthroughs at the Underlying Level of the ADI Blockchain
The stablecoin relies on the ADI blockchain, led by the Central Bank of the UAE, which has three key characteristics:
◦ Hybrid Consensus Mechanism: Integrating Proof of Stake (PoS) and Practical Byzantine Fault Tolerance (PBFT), achieving a transaction processing capacity of 5,000 transactions per second, with a delay of less than 0.2 seconds.
◦ Cross-chain Interoperability: Supports seamless integration with over 20 public chains, including Ethereum and BNB Chain, and has reached a testing cooperation with JPMorgan's Onyx network.
◦ Privacy Enhancement Solutions: Using Zero-Knowledge Proof (ZKP) technology to protect user transaction privacy while meeting central bank regulatory requirements.
2. Global Benchmark of Regulatory Sandboxes
The regulatory framework for stablecoins being built by the Abu Dhabi Global Market (ADGM) starting in 2024 is groundbreaking:
◦ Penetrative Regulation of Reserve Assets: Requiring stablecoin issuers to publish their reserve asset composition daily, with audits conducted by Deloitte's Dubai team.
◦ Liquidity Stress Testing: Simulating solvency verification under extreme market conditions (such as Dirham exchange rate fluctuations exceeding 15%).
◦ Automation of KYC/AML: Achieving automation of KYC processes through an on-chain identity system, improving anti-money laundering review efficiency by 40 times.
III. Ecological Layout: From Regional Pilot to Global Radiation
1. Deep Penetration of Government Scenarios
◦ Salary Distribution for Civil Servants: Starting from January 2025, Abu Dhabi government departments will pilot salary payments in stablecoins, covering 120,000 civil servants.
◦ Distribution of Social Welfare: Gradually tokenizing living expenses such as housing subsidies and medical vouchers, expected to save $230 million in administrative costs annually;
◦ Sovereign Debt Issuance: Plans to issue the first $1 billion blockchain sovereign bond in 2026, allowing investors to participate in subscriptions via stablecoins.
2. Building Cross-Border Payment Networks
Abu Dhabi, in collaboration with Gulf Cooperation Council (GCC) countries, is building a real-time gross settlement system (RTGS) based on stablecoins:
◦ Currency Swap Agreements: Collaborating with the Monetary Authority of Singapore (MAS) to develop a Dirham-SGD stablecoin swap channel.
◦ Belt and Road Settlement: Reaching agreements with countries like Kazakhstan and Azerbaijan to settle energy trade using stablecoins;
◦ African Digital Bridge: Accessing East African payment systems through the Central Bank of Egypt, covering 340 million unbanked users.
3. Expansion of Industrial Application Scenarios
◦ Digitalization of Energy Trade: Collaborating with the Abu Dhabi National Oil Company (ADNOC) to settle crude oil exports using stablecoins;
◦ Tokenization of Real Estate: The Palm Island project in Dubai issued 100,000 real estate tokens, enhancing liquidity by 15 times.
◦ Carbon Financial Innovation: Stablecoins linked to carbon credits, automatically offsetting carbon emission quotas with each transaction.
IV. Challenges and Future: The "Abu Dhabi Paradox" of Stablecoins
1. Risks of Regulatory Arbitrage
Despite the UAE Central Bank emphasizing "strict regulation," the Dirham stablecoin may trigger "regulatory arbitrage":
◦ Arbitrage Pressure: If the Dirham stablecoin circulates on offshore platforms like Tether, it may impact the traditional foreign exchange market of the UAE.
◦ Money Laundering Risks: In a virtual asset money laundering case uncovered by Dubai police in 2024, 72% involved mixing services and privacy coins, necessitating continuous upgrades of regulatory technology.
2. Geopolitical Games
◦ Impact on the Dollar System: If the Dirham stablecoin is widely adopted, it may weaken the dollar's reserve status in the Middle East (currently, dollar assets account for 63% of the UAE's foreign exchange reserves);
◦ Intensifying Regional Competition: Saudi Arabia has approved the issuance of the "Riyal Digital Token," while Qatar has launched the "QAR Pay" project, leading to heated internal competition among Gulf countries.
3. Pressure of Technological Evolution
With the development of quantum computing, existing encryption algorithms face threats. Abu Dhabi has launched a "Post-Quantum Blockchain Program," investing $320 million in the research and development of quantum-resistant signature algorithms, but commercialization will still take 5-8 years.
V. Global Insights: A New Paradigm in the Sovereign Competition of Digital Currencies
Abu Dhabi's practices reveal a third path for the development of digital currency:
• Controlled Innovation: Advancing blockchain applications in an orderly manner under government leadership, avoiding radical strategies similar to El Salvador's adoption of Bitcoin as legal tender.
• Ecological Empowerment: Treating stablecoins as components of digital infrastructure rather than mere speculative tools, deeply binding them to the real economy;
• Technological Autonomy: Self-developed blockchain platforms reduce dependence on Western technology, with a 187% increase in local blockchain patent applications in the UAE in 2024.
As Yasir Al-Rumayyan, Chief Investment Officer of the Abu Dhabi Investment Authority (ADIA), stated: "Stablecoins are not the end of cryptocurrency, but the starting point of digital sovereignty." As oil dollars encounter the shockwave of blockchain, Abu Dhabi is attempting to carve out a third path for the Middle East between traditional financial order and digital financial revolution. This quiet currency war could reshape the global economic power structure of the 21st century.
