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The first half of 2024 has marked a significant rise in stablecoin usage within the UAE, reflecting a year-over-year increase of 55%. 

According to a report shared by Chainalysis to The Byteline, the value of stablecoins received by services, particularly centralized (CEX) and decentralized exchanges (DEX), totaled over $9.8 billion. This is a substantial rise from the $6.3 billion recorded in H1 2023.

Stablecoins now account for the majority of crypto activity in the UAE, representing 51% of transactions, outpacing both Bitcoin (19%) and Ether (9%). 

The surge is attributed to the newly released Payment Token Services Regulation by the Central Bank of the UAE (CBUAE), which sets clear rules for issuing, custodying, and converting payment tokens, as mentioned in the report.

Arushi Goel, Head of Middle East & Africa Policy at Chainalysis, noted the potential for broader participation and innovation driven by the new regulations. 

Retail-sized transfers ($10K and below) made up 6% of the value received, while professional-sized ($10K to $1M), institutional-sized ($1M to $10M), and large institutional-sized ($10M and above) transfers accounted for 40%, 34%, and 20%, respectively. Despite the smaller value share, retail transactions dominated the volume of transfers at 93%.

Chainalysis reported that 78% of stablecoin transfers in H1 2024 occurred on centralized exchanges, compared to 47% of overall crypto transactions in the UAE from July 2023 to June 2024. This trend indicates that stablecoins are increasingly being used for settlements and transfers on CEXs.

In the UAE, the most popular stablecoins are dollar-pegged. Tether (USDT) led the market, accounting for 61% of all stablecoins transacted in H1 2024. Dai (DAI), a decentralized stablecoin on Ethereum, ranked third.

The introduction of Dirham-backed stablecoins, such as AE coin, which has received in-principle approval from the Central Bank of UAE, is anticipated to further drive market adoption and offer significant benefits for remittances, eCommerce, real estate, and government payments.