A Guide to Stablecoins: A Regional Focus on the Arab World and Libya

An analysis of digital stablecoin currency and its transformative potential in the MENA region

Libya, Economy, Digital Assets, Stablecoins, Banking

The pdf version of the guide is accessible through this link

الدليل المبسط للعملات الرقمية المستقرة_.pdf

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Stablecoins have emerged as a transformative force in the global financial landscape, with their total market capitalization surpassing $250 billion by mid-2025. Unlike volatile cryptocurrencies like Bitcoin, stablecoins maintain stable value by pegging to external assets such as the US Dollar, making them ideal for payments, remittances, and cross-border transactions. This unique combination of traditional currency stability with blockchain efficiency positions them as a crucial bridge between conventional finance and the digital economy.

The regulatory landscape for stablecoins varies significantly worldwide, from the European Union's comprehensive MiCA framework requiring full 1:1 backing and banning algorithmic models, to the United States' proposed GENIUS Act restricting issuance to federally supervised entities. Asian markets like Singapore and Japan have developed clear, supportive legislation, while the UK treats fiat-backed stablecoins as electronic money. This regulatory evolution reflects growing recognition of stablecoins' role in the future global financial system.

For the Arab world and MENA region, stablecoins present unprecedented opportunities, particularly in addressing banking infrastructure challenges and facilitating cross-border trade. Progressive markets like the UAE and Bahrain are positioning themselves as regional digital asset hubs, while countries with uncertain regulatory frameworks, such as Libya, could potentially leapfrog traditional banking limitations through innovative stablecoin adoption. The region's $12 trillion annual cross-border payment market represents enormous potential for more efficient, cost-effective digital solutions.

The technical implementation of stablecoins involves four main models: fiat-backed (like USDC), crypto-collateralized (like DAI), algorithmic systems, and tokenized bank deposits. Each model presents different trade-offs between stability, decentralization, and regulatory compliance. For institutions considering stablecoin issuance, success requires careful selection of the appropriate model, robust technical infrastructure, full regulatory compliance, and strategic partnerships with banks and fintech companies.