The UAE Central Bank approves the Dirham stablecoin DDSC! Middle East's first machine-to-machine payment goes live

The Central Bank of the United Arab Emirates has approved Abu Dhabi First Bank’s UAE Dirham stablecoin DDSC, which is now live on the Layer 2 blockchain ADI Chain. DDSC will be used for payments and collections, settlement, fund operations, trade supply chain flows, and providing programmable financial services for regulated entities.

The Third Dirham Stablecoin Approved by the UAE Central Bank

DDSC AED stablecoin is not the only Dirham stablecoin approved by the Central Bank of the UAE. The first approved AED stablecoin is AECoin issued by Al Maryah Community Bank (shortened as Mbank), and Zand Bank has also received a license to issue AEDZ, the UAE’s first regulated, multi-chain AED stablecoin based on public blockchain. As the third approved Dirham stablecoin, DDSC demonstrates that the UAE Central Bank adopts a competitive licensing strategy rather than a monopoly model.

This multi-issuer approach promotes competition and innovation. Different Dirham stablecoins can target different market segments: AECoin mainly for retail payments, AEDZ emphasizing cross-chain interoperability, and DDSC positioned for institutional and government applications. This differentiation avoids direct competition, allowing the three stablecoins to coexist and serve various needs.

In terms of issuers, DDSC is issued by Abu Dhabi First Bank (FAB), one of the largest banks in the UAE with assets exceeding $200 billion. Backed by a major commercial bank, this stablecoin offers superior credit and compliance assurances compared to independent issuers. Futoon Hamdan AlMazrouei, Head of the Personal, Business, Wealth, and Privilege Banking Group at Abu Dhabi First Bank, added: “If the stablecoin’s construction meets strict regulatory and risk requirements, it can responsibly be integrated into the financial system.”

IHC (International Holding Company), one of the main promoters of DDSC, is the largest enterprise group in the UAE, with a market value over $200 billion, spanning real estate, healthcare, education, technology, and more. IHC’s involvement provides strong funding and resource support for DDSC and hints that DDSC may be integrated into the payment systems of many IHC subsidiaries in the future.

It is expected that Abu Dhabi First Bank’s clients will be able to use DDSC through multiple approved platforms. IHC CEO Syed Basar Shueb stated that the launch of DDSC is a significant milestone in the UAE’s digital financial development. This stablecoin will expand the possibilities for regulated digital payments. He explained: “As a programmable stablecoin backed by the UAE Dirham, DDSC aims to modernize payment, settlement, and fund management workflows, while enabling secure, automated value transfers as the autonomous economy develops, including future machine-to-machine transactions and AI agent-to-agent trades.”

Three Core Use Cases for DDSC

Institutional and government payments: cross-border trade settlement, government procurement payments, tax payments, etc.

Supply chain finance: trade financing, accounts receivable management, real-time settlement to reduce capital lock-up.

Autonomous economic transactions: machine-to-machine payments, AI agent automated financial transactions.

The phrase “machine-to-machine transactions and AI agent-to-agent trades” is highly forward-looking. It suggests that DDSC’s design considers not only current human user needs but also prepares for the future autonomous economy. When IoT devices and AI agents need to autonomously execute micro-payments, DDSC’s programmability and frictionless settlement will serve as an ideal infrastructure.

Strategic Significance of ADI Chain Deployment and Ripple Partnership

Andrey Lazorenko, CEO of ADI, announced on LinkedIn that DDSC UAE Dirham stablecoin is now officially live on ADI Chain. He added: “This demonstrates that ADI’s infrastructure is built for real economies, real institutions, and real practical functions. Under the supervision of the Central Bank of the UAE, led by two leading institutions—IHC and Abu Dhabi First Bank (FAB)—the DDSC stablecoin is now operating on a compliant, sovereignty-standard track.”

ADI Chain is a Layer 2 blockchain designed specifically for the UAE’s digital economy. Its choice may be based on several considerations: local control (the UAE can implement sovereign-level regulation and review), performance optimization (nodes distributed and network latency optimized for Middle Eastern users), and compliance integration (built-in KYC/AML mechanisms aligned with UAE laws). Compared to deploying on Ethereum or other public blockchains, ADI Chain offers greater control and customization.

Notably, as previously mentioned, Ripple’s partnership with Zand Bank will directly integrate RLUSD and AEDZ into the XRPL platform. This indicates that the UAE is pursuing a “multi-chain” strategy for stablecoins: DDSC on ADI Chain, AEDZ on XRPL, and possibly AECoin on other chains. This multi-chain deployment reduces risks associated with a single technology stack and provides flexibility for different use cases.

Globally, DDSC is among the few stablecoins approved by a sovereign central bank and backed by a non-USD currency. Most stablecoins (USDT, USDC, USDP) are USD-pegged, making the global digital payment system heavily reliant on the dollar. The emergence of Dirham stablecoins offers an alternative, especially for countries with close trade ties to the UAE (Middle East, Africa, South Asia), allowing DDSC to settle transactions without exposure to dollar exchange rate fluctuations and SWIFT delays.

USDU Approval and the UAE’s Dual-Track Stablecoin Strategy

Recently, the Central Bank of the UAE approved a USD-backed stablecoin USDU as an offshore payment token. Universal Digital Intl Limited, a company regulated by the UAE Abu Dhabi Global Market (ADGM) Financial Services Regulatory Authority (FSRA), issued a fiat-backed reference token aimed at professional clients and has obtained approval for offshore payment token issuance from the UAE Central Bank.

As a registered offshore payment token fully backed by USD, USDU can be used for digital asset payments and derivatives within the UAE. This approval is strategically significant, as it shows that the UAE not only promotes its national currency digitization (Dirham stablecoin) but also welcomes USD stablecoins for use within its borders. This “dual-track” approach balances sovereign currency independence with international trade facilitation.

While Dirham stablecoins mainly serve direct trade and local economic activities, USD stablecoins cater to global trade and crypto asset transactions. They are complementary rather than competitive. For crypto businesses operating in the UAE, DDSC can be used for local rent, wages, and taxes, while USDU can facilitate international dealings, creating a comprehensive digital payment ecosystem.

From a regulatory perspective, the UAE adopts an open yet strict approach: approving multiple issuers and currencies, requiring issuers to be regulated financial institutions, reserves to be fully backed, and ongoing supervision by the central bank. This balanced regulation attracts innovation while controlling risks.

Compared to many countries still hesitating over stablecoin regulation—such as the US with the recent passing of the GENIUS Act (details pending), the EU’s MiCA regulation just coming into effect, and many Asian countries still in research phases—the UAE’s swift actions position it as a leader in global stablecoin development, potentially becoming a regional and global digital finance hub.

From an investment perspective, the growth of the UAE Dirham stablecoin ecosystem will enhance regional crypto infrastructure value. Companies deploying DDSC and AEDZ (on ADI Chain and XRPL), custodial services (Ripple, Ctrl Alt), and crypto exchanges operating in the UAE will benefit from this trend. As sovereign nations actively promote their digital currencies, related technological infrastructure and service providers will enjoy long-term stable revenue streams.

For global stablecoin issuers, the UAE model offers valuable lessons: under a strict regulatory framework, stablecoins can still innovate and grow rapidly. This “regulatory-friendly + technological innovation” approach may prove more sustainable than “regulatory vacuum + wild growth.” Giants like Tether and Circle may need to reassess their strategies in the sovereign currency stablecoin space.

Geopolitically, the UAE’s push for Dirham stablecoins is also part of its de-dollarization strategy. Although the Dirham is pegged to the dollar, digitized Dirhams can bypass SWIFT and reduce reliance on dollar-based financial infrastructure in regional trade. This pursuit of financial sovereignty is especially significant amid current geopolitical tensions.