Stablecoin issuer Circle has confirmed the approval of USDC and EURC stablecoins by the Dubai Financial Services Authority (DFSA), making them the first to be recognized by the city’s special economic trade zone.
The stablecoins are the first to receive full approval from the Dubai International Financial Centre (DIFC), according to a press release. The DIFC is an economic-free zone and home to hundreds of financial institutions, with a distinct legal and tax system from the rest of Dubai.
Following the DFSA’s approval, financial institutions operating in the trade zone can integrate USDC and EURC into their services. Under DIFC rules, only approved digital assets by the DFSA can provide financial offerings to service providers in Dubai.
“This milestone aligns with our mission to make digital dollars and euros more accessible, interoperable, and useful for businesses, developers, and financial institutions worldwide,” said Dante Disparte, Circle’s Head of Global Policy.
Experts are mulling over multiple stablecoin use cases stemming from the approvals of USDC and EURC. Several DIFC-based institutions are exploring treasury management, while others are looking at local and cross-border payment functionalities with the stablecoin.
Circle‘s approval follows a year-long interface with the DIFC, including establishing a local outfit in the region that aligns with regulatory requirements. Circle maintained liquid reserves on a 1:1 basis while disclosing a clear redemption mechanism to the DFSA.
“The DFSA’s approval of USDC and EURC as recognized crypto tokens within the DIFC is yet another validation of our constructive approach to regulatory and policy engagement,” said Disparte.
In 2024, the stablecoin issuer achieved full compliance with the European Union’s Markets in Crypto-Assets (MiCA) regulation.
Innovations in the DIFC
The DFSA’s approval of USDC and Circle is only one part of its move to improve the regional standing of the DIFC. In 2024, the DIFC changed its legal regime, granting property rights on digital assets while updating the definitions of key Web3 terms for global uniformity.
The DFSA has updated its rules for service providers, lifting the ban on digital asset-based funding activities and slashing the fees for token recognition.
AFS inks deal with Ternoa for stablecoin-based PoS terminals in the Gulf
In other news, Arab Financial Services (AFS) has announced a partnership with PayFi network provider Ternoa to roll out payment solutions for enterprises in the Gulf countries using stablecoins.
The partnership will involve stablecoin-based Point-of-Sales (PoS) terminals in the region. The collaboration will see Ternoa lean on Athar’s consumer-facing finance protocol as the underlying architecture for the offering.
For the first time, merchants and consumers in the GCC will have access to stablecoin payments at POS terminals.
AFS says the project will be tested with merchants in the United Arab Emirates (UAE) before being launched across other Gulf countries. The firm has an extensive reach in the Middle East and Africa with 37 banks owning a stake in the company, riding on the Retail Payment Services License in the UAE.
“By integrating stablecoins and decentralized finance, we are unlocking new possibilities for merchants and consumers across the UAE, paving the way for the broader adoption of digital payments in the region,” said AFS CEO Samer Soliman.
Turning to stablecoin, PoS offers several benefits for consumers and merchants alike, with pundits claiming faster transactions as the lowest-hanging fruit. With mainstream credit card systems, stablecoins on scalable ledgers outpace their traditional banking counterparts.
Experts are eyeing the prospects of lower transaction fees for merchants and consumers, and Ternoa CEO Mickael Canu is hailing the offering’s global reach and advanced security features.
The stablecoin-based PoS is expected to improve financial inclusion metrics upon expansion to other GCC countries.
“The next big step for blockchain and digital finance is making it useful in everyday life,” said Canu.
UAE leads digitization in the region
The UAE is setting the pace for digitization in the Gulf, armed with full government support and a raft of private-sector initiatives. Experts say the country’s lead is not a coincidence but the government’s concerted effort to diversify its oil dependency.
To signal its intent, the UAE rolled out a digitization blueprint and funding for emerging technologies like artificial intelligence (AI) and Web3. The decision to loosen licensing requirements for foreign firms has led to numerous global technology firms setting up shops in the country.
Watch: Stablecoins with Daniel Lipshitz
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