There is currently a very active stablecoin landscape in the Middle East, with various regulatory initiatives and new dirham-based stablecoins emerging. The Middle East Stablecoin Foundation was formally incorporated earlier this month at DIFC. Joining us today is Dr. Bhaskar Dasgupta, Chairman of the Middle East Stablecoin Foundation. Thank you so much for joining us.
Thank you for inviting me.
MESA was recently incorporated as a nonprofit at DIFC on July 15th — the region's first industry body dedicated exclusively to stablecoins. What does that unlock that MESA could not do before?
The reason the association was established is that this field is moving extremely, extremely fast. The first thing we needed was a voice for the industry. The second thing — and this is critically important — is understanding what stablecoins actually are. They are not just another form of digital money. For the first time in history, money can be programmed. That is a completely new animal, and it means we have to rethink the basic plumbing of economies. The projects we are working on span strategy, management, processes, data, corridors, and segment types — how family offices work with stablecoins, how treasurers work, how banks work, how corporates work, how individuals work. It is an absolutely amazing time to be working on this.
You have said this region has a chance to be a standard setter rather than a standard taker in this new architecture. What global stablecoin standard is the region best positioned to set first?
When technology moves this fast, standards are difficult to set — it is like the Betamax versus VHS era. Let the market decide. But what is already extraordinary is that the Central Bank of Bahrain and the Central Bank of the UAE were the first out of the blocks with an amazingly well-thought-out rulebook — light years ahead of most other countries in stablecoin terms. Bahrain allows yield-bearing stablecoins, which other jurisdictions are still eyeing nervously. The UAE Central Bank has approved five stablecoin issuers at various stages and has put in place regulation specifically around payments. And then you have VARA, DIFC, and ADGM who can deal with non-AED stablecoins. The regulatory framework is very welcoming but very safe. The second extraordinary benefit the Middle East has is that all its currencies are pegged to the US dollar — and 95 to 97% of all stablecoin activity is in US dollars. The GCC economies are mostly open economies that export and import heavily, all in US dollars. So from a business adoption perspective, this is a great place to be, without the complications of currency controls or FX fluctuations.
The UAE has the Central Bank, VARA, DIFC, and ADGM all active in this space. Is that multi-regulator approach an advantage or a disadvantage?
A distinct advantage — and I say this having worked for the FSA and currently serving on the advisory board of the CMA. In one country, you are able to have different regulators with different rulebooks, experimenting and allowing different business models. Of course, the Central Bank sets boundaries around AED-related activity. But beyond that, this multiplicity of regulatory thinking is extremely fertile ground for new business models. It is not just stablecoins — it is tokenised deposits, real world asset tokenisation, interbank transactions, international trade, international investments. Name it and you will find a regulator in the UAE who can support you.
You have argued publicly that yield-bearing stablecoins could compete with bank deposits. Should banks be the primary stablecoin issuers, or is there a role for non-bank financial institutions?
The traditional concern is that if a stablecoin gives yield, it will compete with bank deposits and ruin credit formation. But I do not think that is as much of an issue now — the Central Bank has actually encouraged local banks to issue stablecoins, so deposits can come through either traditional routes or stablecoins, and it all stays within the banking perimeter. And people have been using yield-bearing stablecoins for a long time regardless — through cash back and other mechanisms. The fact that the UAE model anchors stablecoins through bank issuance is good. It is prudent and conservative — it keeps the core of the economy within the credit formation process. But there is a wider space beyond that where very interesting things can happen. It is a great playground.
You now have 350 active members globally. I am sure there is much more to talk about.
Absolutely. Thank you very much for the invitation. A pleasure.
Thank you so much.
