RAKBANK Receives In-Principle Approval to Launch a Dirham-Backed Stablecoin (RAKBANK)
RAKBANK became the latest United Arab Emirates (UAE) bank to received in‑principle approval from the central bank to issue a fully reserved, 1:1 Dirham-backed stablecoin. Al Maryah Community Bank secured in-principle approval in October 2024 and full licensing in December 2024 for its AE Coin, and Zand (an “AI-powered bank) received full approval in November 2025 for its Zand AED stablecoin. The Central Bank of the UAE’s Payment Token Services Regulation restricts payment tokens to Dirham-backed or specifically approved fiat-referenced stablecoins for onshore payments, effectively steering merchant crypto acceptance toward Dirham stablecoins. In parallel, Dubai’s Virtual Assets Regulatory Authority has finalized Version 2.0 of its activity-based rulebooks, including requirements for fiat‑referenced stablecoins issued by Dubai‑incorporated virtual asset service providers, creating a distinct but complementary regime for Dubai and its free zones. [Source: RAKBANK via Zaya.com]
Lloyds and Archax Complete UK’s First Public Blockchain Transaction Using Tokenised Deposits (Lloyds)
Lloyds Banking Group has completed the United Kingdom’s first public blockchain transaction using tokenized deposits. The transaction involved Lloyds issuing tokenised deposits on the Canton Network (a public blockchain for regulated financial markets) to purchase a tokenised Gilt from Archax, demonstrating how traditional banking can integrate with blockchain technology. Lloyds believes that this innovation offers businesses key benefits including instant settlement, the ability to earn interest while maintaining regulatory protections, access to wider securities trading, automated smart contracts, and enhanced transparency—all while preserving the security of traditional deposits under the Financial Services Compensation Scheme. [Source: Lloyds]
A Framework for Understanding the Vulnerabilities of New Money-Like Products (FRB)
The Federal Reserve (FRB) published a paper that introduces a framework for analyzing vulnerabilities in new money-like products by comparing them to money market funds (MMFs), which have well-documented risks. The authors examine five key features that contribute to vulnerabilities: liquidity transformation, threshold effects, moneyness (perceived safety and liquidity), contagion risks, and reactive investors. They apply this framework to three emerging products: money market ETFs (MMETFs), tokenized MMFs, and stablecoins. The analysis finds that MMETFs have similar liquidity transformation to MMFs but reduced threshold effects due to market pricing; tokenized MMFs largely mirror their underlying MMF vulnerabilities but could become more money-like if token transfers can effect ownership changes; and stablecoins present mixed risks, with the 2025 GENIUS Act likely to standardize payment stablecoins and align them more closely with MMF characteristics. The framework emphasizes that vulnerabilities arise from combinations of these features rather than individual attributes, and that as these novel products evolve and become more familiar to investors, their non-structural features—particularly their perceived moneyness and investor base composition—will likely shift significantly. [Source: FRB]
Upcoming Speaking Engagements:
The Digital Euro Conference 2026 (Frankfurt, March 26) will explore the future of money with a focus on CBDCs, stablecoins, and commercial bank tokens. This hybrid event offers the perfect platform to understand the future of digital money! [Register here and get 20% off the regular ticket price by using the Kiffmeister20 code!]
I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.
