A day after the UAE launched its digital dirham CBDC noting that it would be available to retail consumers by the end of 2025, Sonic Labs, an EVM Layer 1 platform that offers DeFi solutions, announced that it would be developing a UAE mathematically bound numerical AED stablecoin which is settled and denominated in USD.

The decision also seems to stems from the full draft of the STABLE Act by Congress for clearer oversight. According to the text, lawmakers are pushing for a two-year moratorium on algorithmic stablecoin.

As such Sonic Labs no longer wants to develop a US dollar pegged algorithmic stablecoin but an AED one. On March 22, Sonic Labs co-founder Andre Cronje said the company was working on a US dollar-pegged algorithmic stablecoin with an annual percentage rate (APR) of up to 23%.

But now Andre Cronje, Co Founder of Sonic Labs, and the Chief Technology Officer of the company stated on X, “We will no longer be releasing a USD based algorithmic stable coin. Completely unrelated, we will be releasing a mathematically bound numerical Dirham which is settled and denominated in USD, which is definitely not a USD based algorithmic stable coin.”

The UAE had enacted its stablecoin regulations back in 2024, allowing for regulated AED stablecoins to be used as a legal tender for the purchasing of goods and services, while allowing non AED stablecoins that had received regulatory approvals in the UAE to be used for the purchase of virtual assets and other crypto assets.

However the Central Bank of UAE strictly forbids the use of algorithmic stablecoins or crypto in any form.

This has pushed stablecoin issuers such as Tether to see a license for an AED backed stablecoin. Additionally the first AED regulated stablecoin, AE Coin from MBANK received a license. While Arab Financial Services (AFS), regulated by the Central Bank of Bahrain and Egypt, also holding a retail payment license in the UAE has partnered with Ternoa Blockchain to launch stablecoin and crypto payments across POS ( Point of Service) counters for UAE merchants. The partnership will expand across the GCC.

Even Zand, a UAE digital Bank is also seeking to launch an AED stablecoin.

So it will be interesting to see how Sonic Labs will develop this mathematically bound numerical Dirham AED stablecoin and how it will work.

In December 2024, Sonic Labs launched its Sonic mainnet, an EVM-compatible layer-1 blockchain platform that offers developers attractive incentives and powerful infrastructure. With 10,000 transactions per second (TPS), sub-second finality, and a native, decentralized gateway to Ethereum, Sonic empowers developers to build the next generation of applications on unparalleled infrastructure and liquidity.