The Central Bank of the UAE has approved USDU, making it the country’s first foreign-currency payment token registered under a central bank regulatory framework. The approval was granted on the 28th of this month under the Payment Token Services Regulation Framework, or PTSR. It opens an officially recognized digital dollar settlement rail in the UAE.
USDU is cleared for institutional settlement, not domestic retail use
According to the issuer Universal Digital, USDU operates under a dual oversight structure involving ADGM (Abu Dhabi Global Market) and the UAE central bank. The central bank has also drawn a firm line around its use: USDU cannot be used to pay for goods or services inside the UAE. Domestic payment activity is reserved for AED-denominated stablecoins. The approved use cases for USDU are cross-border settlement, derivatives trading, and virtual asset purchases.
That puts the token squarely in the institutional lane rather than everyday consumer payments. Distribution partner Aquanow is tasked with extending that liquidity to regulated institutions globally.
Reserves are held 1:1 in cash at UAE banks
For any stablecoin, reserve quality and custody sit at the center of trust. Official materials say USDU is backed by 100% U.S. dollar cash reserves, held on a 1:1 basis in segregated accounts at major UAE banks. The named custody banks are Emirates NBD and Mashreq Bank, while Mbank supports operations as a strategic corporate banking partner.
The materials also state that USDU will undergo monthly independent verification by a global accounting firm. Structurally, this is a blend of traditional financial custody and blockchain-based settlement, aimed at reducing counterparty risk and concerns over reserve misuse for institutional users.
Approval highlights the UAE’s push in digital asset regulation
The launch also speaks to the UAE’s pace in building digital asset infrastructure. The source material says that by mid-2024, more than $30 billion in digital assets had flowed into the region. Compared with U.S. crypto legislation, which remains exposed to political gridlock, and the EU’s MiCA regime, which comes with a denser rule set, the UAE’s PTSR framework is moving faster.
USDU’s approval suggests the UAE is aiming for more than a transit role in global crypto markets. It is building a regulated offshore digital dollar settlement layer, one designed for cross-border capital movement and virtual asset activity while staying inside the broader rules of the dollar system.