Abu Dhabi ADI Foundation Advances Regulated AED Stablecoin on ADI Chain Testnet

Executive Summary

The Abu Dhabi ADI Foundation, established by Sirius International Holding, has initiated the public testnet of its ADI Chain, an EVM Layer-2 blockchain, to support the development of a UAE Dirham-backed stablecoin. This stablecoin, regulated by the UAE Central Bank, aims to transform payments and commerce while bolstering the UAE's standing as a global leader in technological innovation. The project underscores a bullish sentiment for regional crypto adoption and regulatory clarity, potentially increasing institutional interest in stablecoins and Web3 infrastructure within the UAE.

The Event in Detail

The ADI Foundation has announced the launch of the public testnet for ADI Chain, an EVM Layer-2 blockchain. This infrastructure is specifically designed to power a UAE Dirham-backed stablecoin, a digital token pegged to the UAE's national currency. The stablecoin's development is supported by First Abu Dhabi Bank (FAB), ADQ, and International Holding Company (IHC), and will operate under the regulatory oversight of the Central Bank of the UAE (CBUAE). The ADI Foundation's broader mission includes bringing one billion people into the digital economy by 2030, complementing its efforts in establishing Web3 education platforms to cultivate a blockchain-ready workforce in the UAE. The stablecoin, anticipated for launch in the coming months, is intended to enable instant, low-cost, and compliance-first payments and settlements across the UAE and internationally.

Financial Mechanics and Regulatory Framework

The upcoming UAE Dirham-backed stablecoin is structured to adhere to stringent regulatory requirements established by the CBUAE. Under the recently enacted Payment Token Services Regulation (PTSR), effective June 2025, the CBUAE mandates specific conditions for Dirham-backed stablecoins. These regulations require 100% cash AED to be held in an escrow account at a local bank, with the custodial bank independent of the issuing group. Bank subsidiaries are permitted to hold up to 50% of reserves in UAE government bonds. This approach emphasizes the physical presence of reserve assets within the country's jurisdiction, contrasting with the USA's focus on highly liquid assets (HQLA) for payment stablecoins and the European Union's comprehensive MiCA framework. The PTSR explicitly restricts algorithmic stablecoins and privacy tokens unless specifically approved and differentiates between Dirham-backed and foreign currency-backed stablecoins. After mid-2025, only CBUAE-approved stablecoins will be acceptable for direct commercial use within the UAE, restricting the commercial use of foreign-backed stablecoins like USDT or USDC for goods and services.

Business Strategy and Market Positioning

The ADI Foundation's strategy positions Abu Dhabi as a leading fintech hub and a pioneer in regulated digital assets. By developing a compliance-native blockchain, ADI Chain, the foundation aims to provide an enterprise-grade infrastructure capable of supporting diverse digital services across finance, healthcare, identity, and sustainability, while maintaining regulatory compliance. This aligns with a broader vision to accelerate Web3 adoption across the Middle East, Africa, and Asia, building on its existing reach of over 400 million people. The establishment of platforms for blockchain education and Web3 solution prototyping directly supports the development of a skilled workforce, a critical component for sustained growth in the digital economy. This proactive regulatory and infrastructure development strategy provides a clear framework for institutional participation, differentiating the UAE's approach in the global digital asset landscape.

Broader Market Implications

The initiative by the Abu Dhabi ADI Foundation is expected to have significant implications for the broader Web3 ecosystem and corporate adoption trends. The creation of a CBUAE-regulated AED stablecoin can enhance trust and provide greater stability for digital transactions, potentially attracting increased institutional investment and corporate engagement in the region. The compliance-native design of ADI Chain and the clear regulatory framework set by the CBUAE may serve as a model for other nations seeking to integrate digital assets into their financial systems securely. This move reinforces the UAE's commitment to fostering a regulated and innovative digital economy, potentially influencing global stablecoin utility and investor sentiment positively towards jurisdictions with clear regulatory pathways. The emphasis on talent development through Web3 education platforms also addresses a critical long-term need for the growth of the blockchain industry.