UAE Central Bank Approves First US Dollar Stablecoin
- CBUAE approval makes USDU the first central bank-registered US dollar stablecoin.
- USDU holds one-to-one dollar reserves in UAE bank accounts in an onshore framework.
- Payment token rules allow institutions to settle digital assets using USDU legally today.
The Central Bank of the United Arab Emirates has approved the country’s first USD-backed stablecoin under its Payment Token Services Regulation. The approval allows USDU to operate within a central-bank-regulated payments framework. The decision positions the UAE among the first jurisdictions to authorize a regulated digital dollar for payments.
According to a Thursday press release, the approval grants formal recognition to USDU as a Registered Foreign Payment Token. As a result, regulated institutions can now use a compliant USD stablecoin under existing payment rules. The framework governs how digital payment tokens operate within the national financial system.
The regulatory move places the UAE ahead of the United States, the European Union, and much of Asia. Unlike other regions, the UAE now hosts a live USD stablecoin under central bank oversight. This step marks a structural change in how digital dollars integrate with regulated payments.
Universal Digital Operates USDU Under Dual Oversight
The issuance and management of USDU are handled by Universal Digital. The firm operates under the supervision of the Financial Services Regulatory Authority of the Abu Dhabi Global Market. Universal also holds registration with the UAE central bank for payment token activities.
This dual oversight framework governs reserve custody, disclosures, governance, and operational controls. Universal holds permission to issue a fiat-referenced token under ADGM rules. Simultaneously, the central bank registration allows payment token use across regulated workflows.
Juha Viitala, senior executive officer of Universal, said the registration creates clarity for institutions. “USDU sets a new benchmark for regulated digital value,” Viitala stated in the release. He added that central bank registration provides institutions with clearer compliance pathways.
Reserve Structure and Institutional Use Cases
Reserves backing USDU are held on a one-to-one basis with U.S. dollars. The funds sit in safeguarded onshore accounts at Emirates NBD and Mashreq. Mbank acts as a supporting banking partner for the reserve structure.
Viitala said this structure matters for regulated entities operating in the UAE. Banks, brokers, and licensed venues can now integrate a compliant USD token. They can also align settlement, reporting, and compliance processes without structural changes.
Under the Payment Token Services Regulation, digital asset payments must use fiat or registered payment tokens. That rule also applies to digital asset derivatives settled within the UAE. USDU currently stands as the only USD stablecoin meeting those requirements.
Why does regulatory registration matter when global stablecoins already circulate in UAE markets?
Related: Circle Advances UAE Expansion With ADGM License, New MEA Head
Distribution, Blockchain Infrastructure, and Compliance Scope
While UAE traders widely use global stablecoins like Tether’s USDt, they lack central bank registration. As a result, they do not qualify under the UAE payment-token regime. Viitala said USDU fills that regulatory gap for compliant institutional activity.
USDU operates as an ERC-20 token on the Ethereum blockchain. That structure supports interoperability with existing digital finance infrastructure. It also allows integration with established blockchain-based systems.
Universal appointed Aquanow as a global distribution partner. Aquanow operates as a digital asset infrastructure provider regulated under Dubai’s VARA. The partnership supports institutional access to USDU outside the UAE where permitted.
Mashreq’s Group Head of Corporate and Investment Banking, Joel Van Dusen, commented on the launch. He said growing institutional demand favors regulated digital-value instruments. He added that USDU supports the market’s continued maturation.
A KuCoin report stated that the approval places the UAE among the first major jurisdictions to integrate a USD stablecoin into a central-bank-regulated payments framework.
