Key points
- A stablecoin is a token that aims to keep a fixed value, most often one US dollar. It is not a bank deposit and not legal tender.
- The peg depends on the issuer: its reserves, its redemption terms and the trust holders place in both.
- People use stablecoins to hold a dollar-linked balance, to move value between wallets and to step out of volatile assets without returning to dirhams.
- MKX lists two stablecoins, USDT and USDC, and charges 1.5% to convert AED into either.
- A stablecoin can fall below its target. The MKX terms state that client assets are not covered by any deposit protection mechanism from MKX.
The short answer
A stablecoin is a crypto token that is designed to keep a steady price against another asset, usually the US dollar. Unlike Bitcoin, whose price moves freely, a stablecoin is meant to be worth about one dollar whenever you look. That makes it a practical unit for payments and for parking value between trades.
"Designed to" is the operative phrase. The token is issued by a company that says it holds assets to support the price, and your protection is only as good as those assets and the issuer's willingness to redeem. The sections below explain the mechanism, the uses and the risks. The step-by-step purchase is in the guide to buying USDT in Dubai.
How a stablecoin keeps its value
The commonest design is the fiat-backed stablecoin. An issuer creates tokens when customers hand over dollars and removes them when customers redeem. The issuer states that it holds reserve assets, such as cash and short-term government securities, against the tokens in circulation. If holders believe each token can be redeemed for a dollar, the market price stays close to one dollar.
Redemption is the anchor. Many issuers allow only approved customers to redeem directly with them, so most holders sell on a market instead. If confidence slips, that market price can drift below the target even when reserves are intact. The Financial Stability Board, the international body that coordinates financial regulators, publishes recommendations for stablecoin arrangements; they are listed in the sources, though this page does not summarise their text.
The main types
| Type | What is meant to support the price | Main thing to check |
|---|---|---|
| Fiat-backed | Reserves of cash and similar assets held by the issuer | What the reserves are, who holds them and who can redeem |
| Crypto-backed | Other crypto assets locked in a smart contract, usually over-collateralised | How the collateral behaves in a market fall |
| Algorithmic | Software rules that expand or shrink supply, with little or no reserve | Whether the mechanism survives a loss of confidence |
USDT, issued by Tether, and USDC, issued by Circle, are both fiat-backed dollar tokens. Each issuer publishes its own reserve information; the links are in the sources below. Algorithmic designs carry the most structural risk.
What people use them for
- Holding a dollar-linked balance. Some people keep part of their savings in a token that tracks the dollar rather than in a volatile asset.
- Moving value. A stablecoin can be sent to another wallet on a blockchain at any hour, for a network fee, without sender and receiver needing the same bank.
- Trading. Many people sell a volatile asset into a stablecoin to step out of price swings without going back to dirhams, then buy again later. That is a trading decision with its own risk and costs.
- Settling payments. Some businesses invoice or pay suppliers in stablecoins. Whether that is permitted or sensible depends on the business, its bank and the rules that apply to it.
None of these uses removes the risk that the token itself fails to hold its value.
Stablecoins in the UAE
The dirham is linked to the US dollar, which is one reason a dollar stablecoin is a familiar unit for residents. Regulation is layered. VARA regulates virtual assets in Dubai; the guide to whether crypto is legal in Dubai explains what a VARA licence covers and how to check one. The Central Bank of the UAE separately regulates payment tokens used for payments in the country. MKX has not read that regulation for this page, so it does not summarise its terms here; read the Central Bank's own publication before relying on a stablecoin for payments.
MKX Virtual Assets Broker & Dealer Services L.L.C. is licensed by VARA for Broker-Dealer Services under reference VL/25/04/001. That licence covers the broker-dealer service MKX provides; it does not make any token MKX lists safe or guaranteed. The about page describes the firm.
The risks
- Depeg risk. The price can fall below the target if holders doubt the reserves or the issuer.
- Issuer and reserve risk. You depend on a private company's reserves and disclosures. Reserve reports are the issuer's own statements, and the assurance behind them differs between issuers.
- Redemption risk. Direct redemption may be limited to certain customers, and may be slow or suspended.
- Network risk. The same token can exist on several blockchains. A transfer sent on the wrong network may be lost and cannot be reversed.
- No deposit protection. The MKX terms state that clients' virtual assets are not covered by any deposit protection mechanism from MKX.
- Regulatory change. Rules for stablecoins are still developing, in the UAE and elsewhere.
Buying and selling at MKX
MKX converts AED into stablecoins by bank transfer. Its fee schedule lists USDT and USDC among ten assets, USDT on five networks (ERC20, BEP20, TRC20, Polygon-POS and SOL) and USDC on two (ERC20 and BEP20). The trading fee is 1.5%, the AED bank deposit costs 0% from AED 380, and the minimum external withdrawal is 15 USDT or 15 USDC. Sending USDT outside MKX costs a fixed 5 USDT. MKX publishes no spread, so read the final price on the trade execution screen as well as the fee. All figures are on the fees page.
The route back to dirhams is covered in selling USDT in Dubai and cashing out crypto to a UAE bank account. If this is your first purchase, the first-time buyers checklist sets out what to check at each stage, and the FAQ answers common account questions.
What to check before you hold one
- Read the issuer's terms. Find out who can redeem, at what price and with what conditions.
- Read the reserve disclosure. Note what the reserves are, who reports them and what assurance is given.
- Match the network. Confirm the network of your receiving wallet before you withdraw.
- Size the holding. Hold only what you could bear to see fall below its target.
- Keep records. Save the date, amount and AED value of each conversion in case your bank asks.
Frequently asked questions
What is a stablecoin in simple terms?
A stablecoin is a crypto token designed to keep a steady value, most often one US dollar per token. It moves on a blockchain like other crypto, but its price is meant to stay flat. Whether it does depends on the reserves and redemption terms behind it.
Is USDT the same as the US dollar?
No. USDT is a token issued by Tether that is designed to track the US dollar. It is not legal tender and not a bank deposit. Its value rests on Tether's reserves and terms, which Tether publishes and which should be read before relying on them.
Can a stablecoin lose its value?
Yes. A stablecoin can trade below its target if holders doubt the reserves, the issuer or the redemption process. The MKX terms state that clients' virtual assets are not covered by any deposit protection mechanism from MKX, and MKX's risk warning applies to every asset it lists.
What is the difference between USDT and USDC?
They are issued by different companies, Tether and Circle, each under its own terms and reserve disclosures. MKX lists both: USDT on five networks and USDC on two. Compare each issuer's published reserve information before choosing one.
Why do people in the UAE use stablecoins?
The dirham is linked to the US dollar, so a dollar stablecoin is a familiar unit for many residents. Common uses include holding a dollar-linked balance, moving value between wallets and stepping out of volatile assets. Each use carries its own risks and rules.
Can I buy stablecoins with AED at MKX?
Yes. MKX converts AED to USDT and USDC for a 1.5% trading fee, funded by bank transfer from AED 380. MKX publishes no spread, so check the price on the trade execution screen before you confirm.
Sources
MKX pages were read on the date shown. The Tether, Circle, Financial Stability Board and VARA pages were not re-read on 24 October 2026 and are listed as places to read the primary text, not as sources of any figure used above. No reserve amounts or market-size figures are quoted.
- MKX, Fees: https://mkxotc.com/fees/ (accessed 24 October 2026)
- MKX, FAQ: https://mkxotc.com/faq/ (accessed 24 October 2026)
- MKX, Buy USDT: https://mkxotc.com/buy-usdt/ (accessed 24 October 2026)
- Tether, Transparency: https://tether.to/en/transparency/ (not re-read on 24 October 2026)
- Circle, USDC: https://www.circle.com/usdc (not re-read on 24 October 2026)
- Financial Stability Board, High-level Recommendations for the Regulation, Supervision and Oversight of Global Stablecoin Arrangements (final report, July 2023): fsb.org (not re-read on 24 October 2026)
- Dubai Virtual Assets Regulatory Authority (VARA), register entry for MKX Virtual Assets Broker & Dealer Services L.L.C.: https://www.vara.ae/en/licenses-and-register/public-register/mkx-virtual-assets-broker-dealer-services-llc/ (not re-read on 24 October 2026; licence reference as stated in the MKX footer)
For information only, not investment advice, legal advice or tax advice. Capital is at risk. Issuers' terms and regulations change, so confirm current terms with the issuer and the firm before you act.