Table of Contents
The UAE has become the regional reference point for a two-track approach to stablecoins: letting dollar-backed tokens operate under a licensed framework while building a dirham-denominated layer alongside them, according to a new Viewpoint from global consultancy Arthur D. Little.
The report, “The Sovereign Stablecoin Era: Replication, Not Resistance,” argues that governments worldwide are moving past a binary choice between banning dollar stablecoins and letting them proliferate unchecked. A growing number of jurisdictions are pursuing a third path: regulate the dollar tokens, then build a local-currency alternative to run alongside them. Arthur D. Little names the UAE as the clearest working example of that model in the region.
Stablecoins UAE Report Findings
The UAE’s two-layer structure rests on a regulatory foundation already in place. The Central Bank of the UAE’s Payment Token Services Regulation, issued 7 June 2024 and effective a month later, was the Middle East’s first comprehensive licensing framework for fiat-referenced tokens, covering issuance, conversion, and custody of both dirham and foreign-currency stablecoins. Its transition period closed on 16 June 2026, putting the regime fully into effect.
Operating inside that framework, the UAE now has both international dollar stablecoins moving under license and a dirham-denominated stablecoin, DDSC, built by International Holding Company (IHC), First Abu Dhabi Bank (FAB), and Sirius International Holding. DDSC has already processed more than AED 150 million in institutional transactions and, as UAE Fintech Vibes reported, received a CBUAE No Objection Certificate this year to move onto retail-facing, VARA-regulated exchanges.
Arjun Vir Singh, partner and global head of fintech, payments and digital assets at Arthur D. Little, and a co-author of the Viewpoint, said the two tiers are not meant to compete.
“The UAE is demonstrating that dollar stablecoins and a domestic digital currency ecosystem do not have to be competing choices. Global instruments can continue to serve international flows, while a regulated dirham layer can support domestic and regional activity. This positions the UAE not simply as an adopter of digital finance, but as a market helping define how regulated digital money can coexist across different layers of the financial system,” Singh said.
Dr. Mohammad Nikkar, principal in Arthur D. Little’s Financial Services practice in the Middle East and the Viewpoint’s other co-author, framed the shift as a strategic decision facing banks and payment providers now, not a future one.
“For banks and payment players, the question is no longer simply whether to participate in stablecoins. It is which currency, which payment layer, which client and which corridor they want to serve. The regional layer remains particularly open, creating an opportunity for the UAE and wider GCC to shape how value moves across some of the world’s most important trade corridors,” Nikkar said.
How big the non-dollar layer is today
The report cites global adoption data to back its thesis: unique holders of non-dollar stablecoins grew roughly 30-fold between January 2023 and February 2026, from around 40,000 to more than 1.2 million.
That growth is real, but it starts from a small base. Independent market data reported by CoinDesk in May 2026 put total non-dollar stablecoin circulating supply at roughly $2 billion, against approximately $316 billion in dollar-pegged stablecoins, under 0.5% of the global market.
Dollar stablecoins keep a structural edge that non-dollar issuers are trying to work around: direct access to deep, liquid US Treasury markets that most national currencies can’t match. Arthur D. Little’s thesis stays narrow because of that gap: a regulated local layer becoming the default rail for payments inside its own region, running alongside dollar stablecoins.
| Dollar-backed stablecoins | Non-dollar stablecoins | |
|---|---|---|
| Global circulating supply (approx., May 2026) | $316 billion | $2 billion |
| Share of global stablecoin market | ~99.5% | Under 0.5% |
| Unique holders, Jan 2023 to Feb 2026 | Not cited in report | ~40,000 to 1.2 million (30x) |
Why it matters
For the region’s digital asset market
The UAE’s PTSR framework and DDSC’s build-out give the country a live case study other GCC and wider MENA regulators can point to when deciding whether to license fiat-referenced tokens at all, and whether to pursue a domestic-currency stablecoin of their own. Arthur D. Little’s framing treats that as a genuine first-mover position: most jurisdictions are still deciding between restriction and open proliferation, while the UAE already has both a working license regime and a domestic token moving toward retail use.
For banks and payment providers
Nikkar’s comment changes the shape of the decision facing banks and payment companies in the region. The old question was whether to touch stablecoins at all. The question now is which currency layer and which corridor to build for: cross-border dollar flows, domestic dirham payments, or both. That’s a more concrete planning question than most regional stablecoin coverage has posed so far, and it puts institutions that have stayed on the sidelines on notice that the infrastructure decision is already live.
What’s next
Arthur D. Little’s Viewpoint doesn’t name which other GCC states might follow the UAE’s two-layer model, and DDSC still hasn’t disclosed which VARA-regulated exchanges will carry it at retail or when. Whether the “regional layer” Nikkar describes gets built by the UAE alone or picked up by neighboring regulators is the open question the report raises but doesn’t answer.
FAQs
What is a two-layer stablecoin model?
A regulatory approach that licenses global dollar-backed stablecoins for international use while separately building a domestic-currency stablecoin for local and regional payments, rather than treating the two as competing options.
What is the UAE’s Payment Token Services Regulation?
A CBUAE framework, issued 7 June 2024 and effective from 6 July 2024, that licenses and supervises issuance, conversion, and custody of fiat-referenced payment tokens, including both dirham and foreign-currency stablecoins.
What is DDSC?
A dirham-denominated stablecoin built by IHC, First Abu Dhabi Bank, and Sirius International Holding, settled on the ADI Chain and pegged 1:1 to the UAE dirham.
How big is the non-dollar stablecoin market globally?
Roughly $2 billion in circulating supply as of May 2026, against about $316 billion in dollar-pegged stablecoins, under 0.5% of the total stablecoin market.
Why do most stablecoins stay dollar-denominated?
Dollar stablecoins get direct access to deep, liquid US Treasury markets for reserves. Most other national currencies lack that scale of liquid, low-risk assets to back a stablecoin against.
Editor’s Take: The UAE leads the region framing rests on a real, checkable fact: a licensing regime has been in force since 2024, and a dirham stablecoin is now moving toward retail. Credit where it’s due. But the growth figures Arthur D. Little cites to back the thesis, the 30x jump in non-dollar stablecoin holders, are global numbers, not UAE-specific ones. DDSC’s own disclosed figure, AED 150 million, is institutional volume, not retail adoption.
Regulatory readiness and actual usage are two different claims, and this Viewpoint mostly establishes the first one. The number worth watching isn’t in the report at all: how many people actually choose a dirham stablecoin once DDSC names its retail exchange partners, against the dollar tokens they can already use today.