UAE Approves First USD-Backed Stablecoin Under Central Bank Rules

The Central Bank of the United Arab Emirates (CBUAE) has approved the country’s first U.S. dollar–backed stablecoin, confirming the operational status of USDU under the Payment Token Services Regulation (PTSR). The approval involved Universal Digital, UAE-based banks, and oversight via the Abu Dhabi Global Market (ADGM), laying the groundwork for a fully regulated dollar settlement token.

Central bank approval under the PTSR framework

The CBUAE announced the approval of USDU on Thursday in an official statement. The PTSR governs the issuance, custody, and settlement of payment tokens within the UAE’s national payments system. As a result, USDU—a dollar-pegged stablecoin—has been authorized to operate inside a central bank–supervised payments regime.

USDU is issued and managed by Universal Digital, which operates under the Financial Services Regulatory Authority (FSRA) within ADGM. In parallel, the company is also registered with the CBUAE for payment-token activities. This dual status makes Universal the UAE’s first registered foreign payment token issuer.

According to the announcement, USDU is already live under central bank oversight. The release framed the UAE as the first jurisdiction to integrate a USD stablecoin into a central bank payments-control regime, positioning the country ahead of the U.S., the EU, and much of Asia in this specific regulatory design.

Universal Digital senior executive officer Juha Viitala confirmed the registration, noting that it gives institutional participants clear rules of engagement. Crucially, the approval is not a pilot or sandbox—it is presented as a full regulatory model.

Reserves, banks, and regulatory oversight

USDU is fully backed 1:1 by U.S. dollars held in safeguarded onshore accounts. Emirates NBD and Mashreq provide reserve custody, while Mbank acts as a strategic banking partner. Universal Digital remains responsible for meeting all issuer obligations.

The stablecoin is issued as an ERC-20 token on Ethereum and targets institutional and professional users. The company says an independent international accounting firm provides monthly attestations confirming that dollar reserves match tokens in circulation.

Universal operates under ADGM’s FSRA with permission to issue a fiat-referenced token, while CBUAE registration extends payment-token oversight nationwide. This structure implies stricter governance and disclosure requirements.

Under the PTSR, digital-asset payments in the UAE are permitted only in fiat currency or in registered foreign payment tokens. At present, USDU is the only USD stablecoin positioned as compliant under these requirements, including for settlement of digital assets and derivatives within the country.

Mashreq’s head of corporate and investment banking Joel Van Dusen pointed to sustained institutional interest in regulated digital value instruments, emphasizing current demand without making forward-looking projections.

Distribution, usage limits, and market context

For international distribution, Universal appointed Aquanow as a global distribution partner in jurisdictions where such activity is permitted. Aquanow operates under the Dubai Virtual Assets Regulatory Authority (VARA) and supports on-ramps, off-ramps, and settlement infrastructure.

Within the UAE, USDU is positioned for domestic settlement tied to digital assets and derivatives. However, the token is not intended for general retail payments on the mainland, where dirham-denominated instruments remain the standard for everyday transactions.

Universal is also working with AE Coin, a dirham-backed stablecoin licensed by the central bank. The companies plan to enable future conversion between USDU and AE Coin for domestic settlement, bringing dollar- and dirham-based payment tokens into the same regulatory perimeter.

The approval arrives as U.S. lawmakers continue debating crypto legislation, including provisions in the CLARITY Act that affect stablecoins and DeFi. The UAE’s decision, however, was presented as independent of those developments.

The PTSR included a transition window for compliance. Among USD stablecoins, USDU is the first to complete registration, underscoring its current regulatory standing rather than implying broader market impact.

In short, the UAE central bank’s approval of USDU covers issuance, reserves, banking custody, and distribution within defined limits—establishing a regulated, dollar-pegged stablecoin operating inside the country’s payments framework.