Sonic Labs Drops USD Stablecoin Plans, Shifts Focus to UAE Dirham

Sonic Labs has abandoned its plan to introduce a US dollar-pegged algorithmic stablecoin, shifting its focus to a digital asset linked to the UAE dirham.

The decision, announced by co-founder Andre Cronje, comes just days after the company initially revealed its work on a high-yield USD stablecoin. Cronje now describes the upcoming project as a “numerical Dirham” tied to USD but insists it is not an algorithmic stablecoin.

This change in direction coincides with the UAE’s preparations for its own digital dirham, set to launch as a central bank digital currency (CBDC) in late 2025. Authorities expect the blockchain-based currency to enhance financial security and integrate seamlessly with existing payment systems.

Sonic Labs’ reversal reflects growing skepticism around algorithmic stablecoins, particularly after the dramatic collapse of TerraUSD (UST) in 2022.

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That incident erased billions in value and reinforced concerns about the risks associated with such models. Cronje himself has admitted hesitancy, citing past failures in the sector.

Regulators have since taken steps to prevent similar crises. The European Union’s MiCA framework, for instance, imposes strict controls on algorithmic stablecoins to safeguard financial stability.

Meanwhile, market data suggests that stablecoins are increasingly being used for everyday transactions rather than large-scale capital movement, signaling a shift in how these digital assets function within the economy.

Alexander Stefanov