Originally published on: December 10, 2024
Tether’s USDT stablecoin has been given the green light by the Abu Dhabi Global Market’s (ADGM) Financial Services Regulatory Authority as an accepted virtual asset (AVA).
This approval paves the way for licensed financial service providers within the ADGM to offer USDT-related services, integrating it into regulated financial systems.
The recognition extends to USDT issued on various blockchains like Ethereum, Solana, and Avalanche, in accordance with the UAE’s goal to establish itself as a global digital finance hub.
Boasting a market cap exceeding $138 billion, USDT solidifies its position as the leading stablecoin in the industry through this AVA status.
Stablecoins, like USDT, are playing a crucial role in bridging traditional finance and digital asset markets, a sentiment reflected in ADGM’s decision.
By incorporating USDT into its infrastructure, the ADGM can reinforce its status as an innovative financial center and bolster economic diversification in the UAE.
While stablecoins have made strides in integrating with traditional finance under controlled regulations, concerns remain among some regulators regarding their inclusion.
The United States Financial Services Oversight Council (FSOC) has highlighted stability risks associated with stablecoins due to insufficient risk management practices in the sector.
Recognizing the concentration of market value within a single entity like Tether, FSOC has stressed the need for more robust risk management standards to mitigate vulnerabilities.
In recent months, Tether’s significant minting activities have sparked discussions about its impact on the crypto market, injecting over $5 billion within a span of 72 hours.
With insights from blockchain analytics platform Spot On Chain, it’s evident that these minting events directly influenced fluctuations in USDT’s market capitalization, which peaked at $138 billion post the ADGM approval.
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