USDC stablecoin issuer Circle, based out of the USA, has been facing regulatory scrutiny in its home base, pushing it to look outside and develop partnerships with entities such as Fuze Finance in the UAE,to grow its USDC stablecoin market share in MENA region.
Circle’s expansion plans
Circle which argued with the USA SEC that stablecoins were not securities, with its CEO Jeremy Allaire revealing that 70% of USDC adoption occurs outside the USA with Asia, Latin America, and Africa leading prompted intentions to expand into their markets.
Allaire also predicted significant stablecoin growth for 2024-2025 as regulations emerged in Japan, UK, EU, Hong Kong, UAE, Singapore and finally the USA.
Allaire has been noted as saying, Let’s build on-chain dollars that are a powerful developer primitive (money lego bricks), that embrace the multichain, dynamic world of DeFi, and span from micro-payments to large-scale capital markets. Let’s build this ON SHORE, and have the world know that the regulators of the biggest markets in the world (US, Japan, EU, Singapore, HK, UK, UAE) are ensuring that these are safe, transparent and supervised to bank-grade risk management standards”.
However, US lawmakers have been in strict opposition to stablecoins and have shared several concerns about it. In recent times, US Senator Elizabeth Warren has been at the forefront of the push against cryptocurrencies. Just two days ago, she reintroduced a bill containing various regulations, including a requirement for crypto users to report transactions exceeding $10,000.
This coincides with the US central bank’S aim to enhance transaction monitoring, introduce reversible transactions, and strengthen regulations for cryptocurrency companies.
Deputy Secretary of the US Treasury Wally Adeyemo speaking at a conference noted, “We cannot allow dollar-backed stablecoin providers outside the United States to have the privilege of using our currency without the responsibility of putting in place procedures to prevent terrorists from abusing their platform. We cannot permit offshore financial services providers to use jurisdiction-evasion tactics to avoid complying with our laws.”
While Circle’s Dante Disparte said bank failures in the US earlier this year helped to send investors into “unsafe, opaque” cryptocurrencies overseas, and called for the need for federal legislation around stablecoins, whose value is supposed to stay equal to the dollar.
This has prompted Circle to partner with global players outside of its homebase. It recently partnered with SBI Holding in Japan, to circulate the USDC token in Japan.
Circle needs to increase its marketshare as competition increases from players such as Tether and most recently PayPal. Circle has about $26bn of circulating value for its own USDC stablecoin down from $45 billion in beginning of 2023.
Partnership with UAE Fuze Finance
This brings us to Circle’s recent partnership with UAE based Fuze Finance, MENA’s digital assets infrastructure provider, to expand adoption of USDC stablecoin in MENA region, after signing MOU (Memorandum of Understanding).
Circle will work with Fuze to expand the adoption of USDC amongst new customers in the region, such as banks, fintechs, traditional enterprises and Web3 firms.
The scope of the agreement covers the Middle East, Africa and Turkey, paving the way for the expanded use of USDC in these regions and the piloting of new use cases relevant to these markets.
Miriam Kiwan VP, Partnerships & Business Development, MENA for Circle said, “This collaboration marks a significant milestone in our efforts to enhance financial inclusion and drive the adoption of full-reserve payment stablecoins across MENA. By joining forces with Fuze, we aim to expand the accessibility and usage of USDC, while fostering closer integration between regional and global finance. We look forward to a successful partnership that propels financial innovation and creates new opportunities for individuals and businesses in these dynamic markets.”
Interestingly Mariam Kiwan was recently appointed as VP for Circle in MENA and is based out of Dubai UAE.
Fuze Co-Founder and CEO Mohammed Ali Yusuf (Mo Ali Yusuf) said, “Circle and Fuze share a common vision to create more efficient financial services and deliver digital assets infrastructure that builds a more connected, inclusive economy. We look forward to fostering a close working relationship with the Circle team and are excited about developing the future of finance together.”
Fuze, which was co-founded by Mo Ali Yusuf (CEO), Arpit Mehta (COO) and Srijan Shetty (CTO), has made rapid strides towards building digital assets infrastructure across the region.
Fuze has been making immense strides. In November 2023, UAE based Fuze Finance under the licensed name Morpheus Software Technology (FUZE) FZE received a full VASP license from Dubai’s Virtual asset regulatory Authority. Prior to this Fuze in September raised raised a seed round of $14mn, the largest Seed investment in a digital assets startup in the history of the Middle East and North Africa region (MENA).
Soon after, it partnered with Abu Dhabi headquartered Wio Bank to empower its customers with virtual assets trading services, as well as UAE Al Fardan exchange.
So Circle seems to be partnering with a strong ambitious digital assets player in the UAE.
Stablecoins in UAE
The stablecoin market in the UAE is growing as well. Former Softbank executive Akshay Naheta, embarked on a new venture in Abu Dhabi UAE focused on stablecoins. The entity Distributed Technologies Research (DTR) within Abu Dhabi’s international financial free zone and Hong Kong DRAM Trust plan to tap into the stablecoin market by creating the DRAM Coin backed to the UAE currency, the AED.
During Gitex 2023 held in Dubai The Hashgraph Association, the nonprofit association associated to the Hedera Blockchain announced the launch of its stablecoin accelerator, Stablecoin Studio.
Even USA based Fluent Finance, a blockchain enabled fintech infrastructure company responsible for developing the connections from core banking to public layers, bridging Web2 to Web3 utilizing the Fluent Protocol, has joined UAE’s Ministry of Economy NextGEN FDI program as Fluent plans to launch its operations in Abu Dhabi.
Fluent is working to issue deposit tokens which are stable-valued, regulatory-compliant digital assets interoperable with core banking systems. With Fluent, banks may issue fiat-equivalent tokens directly to public blockchains based on outstanding customer deposits and central bank-issued CBDCs.
Bernstein analysts have predicted that the stablecoin market will reach $2.8 trillion within the next five years. Currently, there are approximately $124 billion worth of stablecoins in circulation, with Tether’s USDT being the largest, followed by the Circle-issued USDC.
In Checkout.com’s third annual report on digital transformation in MENA for 2022, confirmed that 42 percent of 18-40 year olds in the UAE have held digital assets such as crypto, stablecoins and NFTs, and 59 percent of 18-40 year olds would like to be able to pay for goods and services in crypto or stablecoins in the next 12 months.
So the stablecoin market is heating up not only globally but in the Middle East.