Abu Dhabi Global Market regulators have approved Tether’s USDT as a recognized virtual asset, enabling USDT-based financial services.
Tether’s USDt stablecoin has been formally recognized as an accepted virtual asset (AVA) by the Abu Dhabi Global Market’s (ADGM) Financial Services Regulatory Authority.
With the sanction, licensed financial service providers within the Abu Dhabi Global Market (ADGM) are able to provide services related to USDT in order to facilitate its integration into regulated financial ecosystems.
The United Arab Emirates’ strategy to establish itself as a global center for digital finance is in alignment with the recognition of USDT which has been issued on a variety of blockchains, such as Ethereum, Solana, and Avalanche.
USDT’s incorporation as an AVA fortifies its status as the largest stablecoin in the sector, as its market capitalization surpasses $138 billion.
Regulatory Approval
The decision of Abu Dhabi Global Market (ADGM) is indicative of the growing significance of stablecoins in the process of bridging the divide between traditional finance and digital asset markets.
The ADGM could support its economic diversification in the UAE and strengthen its position as a financial center for innovation by incorporating USDT into its framework.
Although stablecoins have been incorporated with traditional finance through controlled regulatory actions, some regulators have expressed apprehensions regarding the integration.
FSOC Has Issued Cautionary Note Regarding Integration Of Stablecoin
The United States Financial Stability Oversight Council (FSOC) has determined that stablecoins pose a threat to financial stability as a result of their inadequate risk management standards.
The FSOC, by the council’s perspective on stablecoins over the years, noted that the market is “heavily concentrated,” with a single firm (Tether) holding approximately 70% of the sector’s “total market value.”
The FSOC has advocated for the implementation of more stringent risk management standards to mitigate vulnerabilities, such as systemic risks and exposure to bank runs.
Tether contributes More Than $5 Billion To Cryptocurrency Market
Tether’s minting rampage in November provoked discussions regarding its impact on the crypto market, as it injected more than $5 billion into the market within 72 hours.
The timeline of issuance events was outlined in data from Spot On Chain, a blockchain analytics platform.
Bitcoin reached a record high of $76,200 on November 6, and the first $1 billion was minted at the same time.
USDT’s market capitalization reached approximately $124 billion in early November as a result of the minting event.
It then surged to $132 billion by November 26 and ultimately settled at approximately $138 billion on December 10 following the Abu Dhabi Global Market’s (ADGM) approval.