UAE Central Bank Approves First USD-Backed Stablecoin
- UAE central bank approves first USD-backed stablecoin under payment token rules framework.
- USDU operates live with 1:1 dollar reserves held at Emirates NBD and Mashreq banks.
- Approval makes USDU the only USD stablecoin allowed for digital asset settlement in UAE.
The UAE central bank approved the country’s first USD-backed stablecoin. The Central Bank of the United Arab Emirates cleared USDU under its Payment Token Services Regulation, confirming operational status. The approval involved Universal Digital, UAE banks and Abu Dhabi Global Market oversight, establishing a compliant dollar settlement token.
Central Bank Approval Under the PTSR Framework
The Central Bank of the United Arab Emirates approved USDU under the Payment Token Services Regulation, according to a Thursday press release. Notably, the framework governs payment token issuance, custody, and settlement within the UAE’s payments system. The approval allows a USD-pegged token to operate within a central bank payments regime.
Universal Digital issues and manages USDU, operating under the Financial Services Regulatory Authority of Abu Dhabi Global Market. However, the approval also registers Universal with the central bank for payment-token activities. This dual status makes Universal the UAE’s first registered Foreign Payment Token Issuer.
The press release stated that USDU now operates live under the central bank’s payments oversight. Consequently, the UAE becomes the first jurisdiction to host a USD stablecoin within such a regime. The release said this places the UAE ahead of the United States, the European Union, and much of Asia.
Juha Viitala, Universal’s senior executive officer, confirmed the registration status following approval. He said the designation provides institutions clarity under existing rules. Notably, the approval establishes a compliant framework rather than a pilot or sandbox arrangement.
Reserve Structure, Banks, and Regulatory Oversight
USDU maintains full 1:1 backing with U.S. dollars held in safeguarded onshore accounts. Emirates NBD and Mashreq provide reserve custody, while Mbank serves as a strategic banking partner. However, Universal remains responsible for meeting all issuer obligations.
The stablecoin issues as an ERC-20 token on Ethereum and targets institutional and professional use. According to Universal, a global accounting firm provides monthly independent reserve attestations. These attestations verify dollar balances supporting circulating tokens.
Universal operates under ADGM’s FSRA with permission to issue a fiat-referenced token. At the same time, the CBUAE registration governs payment-token activities nationwide. This structure imposed stricter governance and disclosure standards.
Under the PTSR, digital asset payments in the UAE may occur only in fiat or registered foreign payment tokens. Therefore, USDU currently stands as the only USD stablecoin meeting those requirements. This status applies to digital assets and derivatives settlement within the country.
Mashreq’s Group Head of Corporate and Investment Banking, Joel Van Dusen, addressed institutional demand. He said regulated digital-value instruments continue attracting interest from banks and market participants. However, his remarks focused on market conditions rather than future projections.
Related: USDT Gains Formal Recognition Under ADGM Framework
Distribution, Usage Limits, and Market Context
Universal appointed Aquanow as a global distribution partner to support institutional access outside the UAE, where permitted. Aquanow operates under Dubai’s Virtual Assets Regulatory Authority. The partnership supports on-ramps, off-ramps, and settlement infrastructure.
Within the UAE, USDU supports domestic settlement for digital assets and derivatives. However, the token cannot serve general retail payments on the mainland. Dirham-denominated instruments remain standard for everyday transactions.
Universal also works with AE Coin, a dirham-backed stablecoin licensed by the central bank. The firms plan future conversion between USDU and AE Coin for domestic settlement. This aligns dollar and dirham payment tokens within the same regulatory perimeter.
The approval arrives amid uncertainty in U.S. crypto legislation. Lawmakers continue debating provisions in the CLARITY Act affecting stablecoins and decentralized finance. However, the UAE approval occurred independently of those developments.
PTSR included a transition period for compliance. Among USD stablecoins, USDU became the first to complete registration. This confirmation underscores its current regulatory standing rather than broader market impact.
The UAE central bank approved USDU under its payment token rules. The approval covers issuance, reserves, banking custody, and distribution within defined limits. These elements establish a regulated USD stablecoin operating inside the UAE payments framework.
