Joining me now in the studio is Bryan Stirewalt, executive advisor at Grant Thornton UAE and also independent non-executive chairman of Julius Baer Middle East, to discuss more whether stablecoins are simply another payment tool or the future of money itself, especially here in the UAE.
Bryan, thank you for joining us today.
My pleasure.
OK, first, let's start in plain terms.
What exactly is a stablecoin?
Yeah, it's a very good question.
We don't often start there.
People just assume things, but a stablecoin is a digital asset, but it's a digital asset that is backed by a reserve.
Typically for most stablecoins, that's a US dollar instrument.
And as you've just mentioned in your opening remarks here this morning, the two largest stablecoins around the world are Circle USDC and Tether USDT.
So it's an encouraging sign, I think, for the overall liquidity of the market and the advancement of stablecoins to have Tether signing an MOU here with the DMCC.
Yeah, exactly.
I was going to ask you, what does that mean now for the UAE to sign this MOU with Tether, and what does it change?
Yeah, so one, it brings more investment into the UAE, and typically these markets have been thought of as a source of capital for innovation elsewhere, but now what you're seeing in the UAE is this is a source of innovation that's bringing capital, so we're reversing this trend.
And that's an exciting place to be, looking at all the investments that the country is making and looking at the innovative approach that the country has taken with digital assets and making that part of the country's strategy.
It's an exciting time.
It's definitely exciting to see that here, and also another news that the UAE just brought stablecoins and DeFi under federal law with penalties up to 1 billion dirhams, just like we mentioned before.
Is that a crackdown or is it what the industry actually needed?
So I wouldn't put it as either or.
I'd put it as both.
One, it's a serious statement about the need for regulation here, and there are a multitude of regulators, as you know, in the UAE — the UAE Central Bank, the Capital Markets Authority, Abu Dhabi Global Market, the DIFC, and VARA — all of them have a stablecoin regulatory regime.
But what that's saying is get with one of those regimes, become regulated, because the country will not tolerate an unregulated market to survive here.
Part of that is unauthorized activity.
Another part of that is the seriousness with which the country is taking anti-money laundering legislation, and that's also applicable here.
The UAE also has its own AED-backed stablecoin called AECoin.
Can someone living here actually use it day to day yet?
So that's a growing part, and players like Circle and Tether will build the liquidity in that market as well.
But for AECoin, and I think there are 3 other stablecoins currently in the process, people can use it right now, but probably in a limited way.
So it doesn't just simply take a source of stablecoin — it takes someone to use the stablecoin.
The more petrol stations that accept stablecoin, the more shops that accept stablecoin, the ability to take a payment in stablecoin requires a bit of market adjustment.
So it's not just about the people using it — it's about the people who are going to accept it as payment, like rent or anything else, right?
You have to have somebody with the stablecoin and you have to have somebody willing to accept it, and that's growing day by day.
Yes, and in the UAE we also have millions of expats living here and sending money back home.
Can stablecoins actually save them money on transfers and fees?
This is one of the most exciting parts of stablecoins that I saw from the very beginning — the ability to make a cross-border payment.
Now the AECoin and the Central Bank's dirham-denominated stablecoin will probably start more on a domestic route, but the ability to make a cross-border payment or remittance is really exciting because anything that we can do as a country to help a laborer move money to India, to Pakistan, to Bangladesh, to the Philippines — the common corridors — because they are supporting families.
There may be one worker here and four members of a family elsewhere, and to allow those people to transfer money in a safe way that stablecoin allows, in a faster way that stablecoin allows, in a cheaper way that stablecoin allows, and in a 24/7 environment — that's a tremendous benefit of this particular product.
Yeah, of course it's very convenient for them to be able to do that.
You've also sat on both sides of the table, as a regulator and now as a bank chairman.
Let's talk about regulation.
Does heavy regulation help or hurt innovation?
Heavy regulation never helps anything.
The right size of regulation is what helps.
And that's where you're seeing a lot of the progress in the UAE right now — they're really doing the right thing with their regulatory stance.
And this is one thing we're seeing with the MENA FinTech Association too.
If you look at the website, which I'd encourage everybody to visit at menafintech.org, what you're going to see is the advancements that have been made through collaboration.
The MENA FinTech Association looks at advocating, collaborating, empowering, and educating the public.
And when you bring academics together with builders, investors, and regulators all in the same room, the result is not going to be heavy regulation, it's not going to be light regulation — it's going to be the right regulation.
And that's where the country succeeds: balanced regulation, shaped for the benefit of the country and the region itself.
Now let's move to Saudi Arabia, also moving fast when it comes to digital finance and CBDCs.
How does the UAE's approach to stablecoins compare to Saudi Arabia's?
They're very close to each other, the way I see it.
Saudi Arabia is moving forward with their Vision 2030, and the MENA FinTech Association works with Saudi Arabia as well, with both the Capital Markets Authority and SAMA, the central bank.
But both regulators — the Central Bank of the UAE and the regulators in Saudi Arabia — have the same thing in mind.
They push for consumer protection.
They push for financial stability.
They push for market integrity.
And so you're seeing very similar approaches to reserve assets, very similar approaches to auditing those reserve assets, and very similar — if not identical — approaches to fighting money laundering through digital assets.
There are many more similarities than differences between the two.
Yeah, definitely.
So five years from now, are stablecoins going to be just another tool, or do they actually replace how we move money?
Five years from now, I think you're going to see a deeper market in stablecoins.
I don't think they'll replace money, not yet.
The big debate now is stablecoin versus tokenized deposits.
You see a lot of this discussion around the world, and innovation almost never occurs top down — it occurs from the bottom up.
And that's what you see from the 25,000 members of the MENA FinTech Association.
This is bottom-up advancement.
There would not be a discussion of tokenized deposits right now if stablecoins were not a success.
But it's not a binary event going forward — you'll probably have both.
It'll be another instrument.
Which brings another topic from regulators that I think deserves more focus than it's getting right now: financial literacy, and how to educate people on what's a safe place to put their money and how to use various financial assets.
I think it's very needed at the moment.
So last thing — three stablecoins are currently recognized: USDC, Eurocoin, and REBL.
What does it take to get on that list?
A serious approach is what it takes, but I think in fairness, the DFSA is trying to move away from lists and toward basic criteria for recognition.
That regime has been changing over the past year, and I think we're now at a point where we're going to move past just a list of three and toward criteria.
If you want to be a stablecoin, this is what it takes — so you're going to see a deepening of that pool.
That's my personal opinion.
You said serious approach — do you think we're there?
Absolutely, we're there.
And some of the less serious players in this market are being pushed out through those regulations you talked about earlier — you have to sign up with one of the regulators here to become an official part of this sector.
But it's exciting to see.
It is very exciting, and I thank you so much for joining us today, Bryan.
Thank you.
It's my pleasure.
