30-3-2025 – Sonic Labs has abandoned its plans for a USD-backed algorithmic stablecoin, opting instead to develop a UAE dirham-linked alternative amidst mounting regulatory pressures in the United States.
The Dubai-based firm’s co-founder Andre Cronje, who previously grappled with the complexities of algorithmic stablecoins, unveiled the revised strategy through social media platform X. The new initiative promises a “mathematically bound numerical Dirham” with USD settlement, though Cronje emphatically distances it from traditional algorithmic stablecoin models.
This repositioning arrives at a pivotal moment as the UAE prepares to roll out its blockchain-powered digital dirham by end-2025. The central bank governor, Khaled Mohamed Balama, envisions this innovation as a cornerstone for enhanced financial integrity and expanded payment accessibility, complementing existing physical currency.
The shadow of Terra’s catastrophic $40 billion collapse in 2022 continues to influence industry dynamics, prompting heightened scrutiny of algorithmic stablecoins globally. This watershed moment, which devastated countless investors, has catalysed regulatory responses worldwide, with the European Union’s MiCA framework explicitly prohibiting such instruments.
Across the Atlantic, American legislators are crafting comprehensive stablecoin oversight through dual legislative proposals – the GENIUS Act and STABLE Act. These frameworks mandate strict 1:1 reserve requirements whilst excluding algorithmic models, with implementation anticipated within two months. Industry giants including Tether, Circle, and Ripple are positioning themselves strategically within this evolving landscape.
Just days before this dramatic shift, Sonic Labs had tantalized investors with promises of up to 23% APR on their proposed USD-based algorithmic stablecoin. Cronje’s previous candid admissions about experiencing “PTSD” from past algorithmic stablecoin ventures add a layer of context to this abrupt change in direction.
