UAE Central Bank Approves First Dollar-Backed Stablecoin

The Central Bank of the United Arab Emirates has approved the country’s first dollar-backed stablecoin, known as USDU. This development marks an important milestone in the region’s digital finance journey

This decision puts the UAE among countries that offer clear and regulated digital payment options. As recently revealed, these payments are backed by traditional currencies.

UAE Central Bank Gives Green Light Under New Rules

On January 29, the Central Bank of the UAE approved the launch of USDU under its Payment Token Services Regulation framework. This approval allows USDU to operate as a stable digital token backed 1:1 to the United States dollar

The dollar-pegged stablecoin comes almost two years after the bank greenlit AED, a dirham-backed token. The move reflects the central bank’s effort to encourage innovation while maintaining strong oversight of digital assets. The bank shared that Universal Digital, a financial technology firm, will issue and manage the USDU stablecoin

The company operates under the supervision of the Financial Services Regulatory Authority at Abu Dhabi Global Market. This ensures it follows strict financial and regulatory rules. With this approval, Universal Digital has become the first foreign payment token issuer to be officially registered by the UAE Central Bank

As announced, Mbank, a well-known financial institution will serve as the company’s main banking partner. It will provide banking support and help build a strong and reliable system for the stablecoin’s operations.

USDU Sees Strong Banking Support and Full Dollar Backing

USDU will operate as a formally registered foreign payment token and the first dollar-pegged stablecoin approved by the UAE central bank. Its reserves remain fully backed by U.S. dollars held in secure local accounts at Emirates NBD and Mashreq

This structure aims to ensure stability, trust, and transparency for users and institutions that rely on the newly-launched stablecoin. USDU forms part of the UAE’s wider effort to strengthen its crypto sector through firm and clear regulations

Authorities have taken steps to address risks linked to money laundering and sanctions compliance. Dubai has taken steps to ban privacy tokens to reduce regulatory concerns. These actions show the country’s focus on safety, transparency, and long-term growth.

Growing Demand for Regulated Digital Assets

The approval of USDU comes at a time when global interest in regulated digital payment tools continues to rise. Financial institutions and crypto firms are increasingly seeking clear rules and reliable frameworks before engaging with digital assets

By approving USDU, the UAE provides clarity and confidence to market participants looking for compliant and stable digital value instruments. The launch of USDU also arrived as uncertainty grows around stablecoin regulation in America. Lawmakers continue to debate key parts of the market structure bill, including rules affecting stablecoins and decentralized finance

Against this backdrop, the UAE’s clear and structured approach positions the country as a stable and attractive hub for digital finance.

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