Central Bank of the UAE Approves First USD-Backed Stablecoin

The Central Bank of the United Arab Emirates (UAE) said Thursday that it has approved first US dollar-backed stablecoin – dubbed USDU, enabling compliant settlements for cryptos and derivatives.

According to a press release, the stablecoin maintains 1:1 reserves backing, safeguarded in onshore accounts at partner banks. The token is issued and managed by a regulated entity, Universal Digital.

Universal’s banking partners include Emirates NBD and Mashreq, with monthly independent attestation. Meanwhile, Mbank serves as strategic banking partner.

Further, Aquanow, a crypto infrastructure firm, serves as a global distribution partner. It also supports professional clients’ access to USDU outside the UAE wherever permitted.

“Being the first Foreign Payment Token registered by the UAE Central Bank – and supported by leading UAE banks – gives institutions the clarity and confidence they have been waiting for,” said Juha Viitala, CEO at Universal Digital.

USDU Stablecoin Addresses Institutional Demand

The stablecoin addresses institutional demand for regulatory transparency in digital assets, the release said.

USDU potentially reduces cross-border settlement costs, enhancing MENA’s competitiveness in the global stablecoin market.

Stablecoins have been gaining significant traction across the Middle East region. The Central Bank of the UAE granted in-principle approval for AED stablecoin in 2024. Under the new Payment Token Services Regulation, the dirham-pegged AE Coin functions as both a local trading pair and a widely accepted payment method for everyday transactions within the UAE.