The Central Bank of the UAE has approved the launch of USDU, making it the country’s first U.S. dollar-pegged stablecoin formally registered under the central banking framework. The move places the token inside the UAE’s regulated payments and digital asset system rather than outside it.
The approval was granted on Thursday under the Payment Token Services Regulation, or PTSR. USDU is issued by Universal Digital, a company regulated by the Financial Services Regulatory Authority of Abu Dhabi Global Market. With that registration in place, Universal becomes the first issuer of a foreign payment token cleared by the UAE central bank, allowing banks and licensed financial institutions to plug USDU into existing systems for more efficient settlement of U.S. dollar-denominated digital asset transactions.
Dual oversight puts reserve and governance standards at the center
USDU will operate under supervision from both the FSRA and the Central Bank of the UAE. That structure adds compliance requirements across reserve management, governance, disclosures, and operational controls. Universal executive Juha Viitala said the layered model raises discipline across the stablecoin’s operations while giving regulated institutions a clearer path for compliant use.
For institutions, the key point is not novelty. It is the reduction of regulatory uncertainty. A payment token that fits within defined supervision is easier to use in existing risk, treasury, and settlement processes.
Ethereum-based ERC-20 design with 1:1 dollar backing
USDU is expected to launch as an ERC-20 token on Ethereum. The report notes that Ethereum remains the largest stablecoin issuance network by market capitalization, with more than $160 billion in stablecoins outstanding. Its infrastructure and liquidity continue to make it a common choice for institution-focused issuance.
The token will be backed one-to-one by U.S. dollar reserves. Those reserves are to be held by major UAE banking institutions, including Emirates NBD and Mashreq, while independent monthly attestations are planned to verify transparency and reserve integrity.
Rising institutional demand is shaping stablecoin policy
Joel Van Dusen, Mashreq’s Group Head of Corporate and Investment Banking, said the launch comes as institutional demand for regulated digital-value instruments continues to increase. The article says interest in digital assets and stablecoins has expanded sharply since 2025, driven by faster settlement needs, better capital efficiency, and clearer regulation.
Governments and regulators around the world are also building formal stablecoin frameworks at a faster pace, especially after the U.S. GENIUS Act took effect. While many jurisdictions have focused on stablecoins backed by domestic currencies, the UAE chose to approve a dollar-backed token. That decision highlights the dollar’s enduring role in global trade and financial settlement, and it strengthens the UAE’s position between traditional finance and blockchain-based settlement rails.