Universal Digital has launched USDU, the first U.S. dollar-backed stablecoin registered by the Central Bank of the United Arab Emirates as a Foreign Payment Token under the Payment Token Services Regulation. The registration marks the first live implementation of a central-bank-approved framework for U.S. dollar digital settlement within a bank-regulated environment.
With the approval, Universal Digital becomes the first Foreign Payment Token Issuer formally registered by the UAE central bank. The designation allows USDU to operate as a compliant settlement instrument for digital assets and derivatives under UAE law, where payments must occur in fiat currency or through a Registered Foreign Payment Token.
According to company statements, USDU represents a regulated alternative to widely used global dollar stablecoins that lack registration under the UAE’s payment token regime.
Reserve custody anchored in UAE banking system
USDU maintains full 1:1 backing with U.S. dollar reserves held in safeguarded onshore accounts at Emirates NBD and Mashreq. Mbank supports Universal Digital as a strategic corporate banking partner.
Juha Viitala, senior executive officer at Universal Digital, said the registration addressed a long-standing institutional gap.
“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. It lays the groundwork for a more transparent and efficient digital-asset market in the UAE and beyond.”
Joel Van Dusen, group head of corporate and investment banking at Mashreq, echoed the institutional focus.
“We see growing institutional interest in regulated digital-value instruments, and Universal’s introduction of USDU is a timely step that supports this market’s maturation.”
Universal stated that a global accounting firm provides monthly independent attestations for USDU reserves, while banking partners handle custody and safeguarding responsibilities.
Dual oversight raises compliance bar
Universal Digital operates under dual regulatory supervision. The firm holds authorization from the Financial Services Regulatory Authority of Abu Dhabi Global Market to issue a fiat-referenced token, while the Central Bank of the UAE oversees payment token registration.
Viitala said that this structure imposed stricter requirements across governance, disclosures, and operational controls.
He said the Payment Token Services Regulation included a transition period for issuers to reach compliance and that USDU became the first U.S. dollar stablecoin to complete the process.
Under the PTSR framework, regulated institutions such as banks, brokers, and licensed venues now have access to a central-bank-registered U.S. dollar token that fits existing compliance, settlement, and reporting workflows.
Institutional use cases take priority
USDU is issued as an ERC-20 token on Ethereum and targets institutional and professional users rather than general retail payments. Domestic retail payments in the UAE remain centered on dirham-denominated instruments.
Universal said UAE-based traders widely use stablecoins such as Tether’s USDt and Circle’s USDC through exchanges and over-the-counter desks. However, those tokens do not meet Central Bank registration requirements under the PTSR.
As a result, USDU currently stands as the only U.S. dollar stablecoin formally eligible for compliant digital asset settlement within the UAE regulatory perimeter.
Distribution partnerships support infrastructure rollout
Universal appointed Aquanow, which operates under Dubai’s Virtual Assets Regulatory Authority, as its global distribution partner. The partnership aims to integrate USDU into regulated digital asset infrastructure, including on- and off-ramps and settlement services.
The firm also confirmed work with AE Coin, a dirham-denominated stablecoin licensed by the Central Bank of the UAE. The effort targets future conversion between USDU and AE Coin for domestic settlement, aligning dollar and dirham payment tokens under the same regulatory framework.
Universal stated that USDU remains restricted from general retail use on the mainland, in line with existing monetary standards.
Stablecoin policy momentum builds across UAE
The USDU launch follows broader regulatory momentum in the UAE digital asset sector. In December, Circle secured a financial services permission license from Abu Dhabi Global Market’s Financial Services Regulatory Authority, allowing it to operate as a money services provider in the region.
Circle said it planned to expand regulated payment and settlement services for businesses and institutions across the UAE and the wider Middle East and Africa region. USDC remains the world’s second-largest stablecoin by market capitalization.
At the same time, UAE authorities have tightened oversight in other areas of the crypto sector. Dubai has banned privacy tokens over compliance concerns, reinforcing the country’s emphasis on traceability and regulated settlement.
Early challenges shape rollout expectations
While USDU introduces a compliant U.S. dollar settlement option, its scope remains defined by regulatory boundaries. Institutional adoption depends on integration timelines, operational readiness, and market education within regulated venues.
Universal framed the launch as foundational rather than expansive, with emphasis on compliance, reserve discipline, and bank integration rather than rapid retail growth.
Anastasiia G
Disclaimer: All materials on this site are for informational purposes only. None of the material should be interpreted as investment advice. Please note that despite the nature of much of the material created and hosted on this website, HODL FM is not a financial reference resource, and the opinions of authors and other contributors are their own and should not be taken as financial advice. If you require advice. HODL FM strongly recommends contacting a qualified industry professional.
