Abu Dhabi-based Universal Digital has launched USDU, the first US dollar-backed stablecoin registered by the Central Bank of the United Arab Emirates (CBUAE) as a Foreign Payment Token under the Payment Token Services Regulation (PTSR). According to a release shared with Cointelegraph, this registration positions Universal as the UAE’s first Foreign Payment Token Issuer, providing a regulated US dollar-denominated settlement option for digital assets in the UAE.

Juha Viitala, a senior executive officer of Universal, noted that USDU is the first USD stablecoin to receive such registration, highlighting the importance of regulatory compliance in the digital asset space. Universal is regulated by the Abu Dhabi Global Market’s Financial Services Regulatory Authority (FSRA) and now holds simultaneous registration with the CBUAE for payment-token activities. Viitala emphasized that this dual oversight ensures a higher level of discipline in reserve custody, governance, disclosures, and operational controls.

For institutions in the UAE, this means they now have access to a central-bank-registered US dollar token, streamlining their compliance, settlement, and reporting workflows. Under the PTSR, only fiat or a Registered Foreign Payment Token can be used for payments related to digital assets and derivatives. While global stablecoins like Tether’s USDt and Circle’s USDC are widely utilized by UAE-based traders, they lack registration with the CBUAE, making USDU the only compliant US dollar stablecoin in the market, according to Viitala.

USDU is issued as an ERC-20 token on Ethereum, targeted at institutional and professional users. Its reserves are fully backed 1:1 by US dollars held in safeguarded onshore accounts at Emirates NBD and Mashreq, with Mbank serving as a strategic corporate banking partner. A global accounting firm provides monthly independent attestations to ensure transparency and trust.

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Viitala mentioned that the banking partners contribute to reserve custody and safeguarding while Universal remains accountable for its obligations. “User confidence stems from the combination of regulated banking custody, recurring third-party attestations, and regulatory oversight,” he remarked.

Universal is also collaborating with AE Coin, a dirham-denominated stablecoin licensed by the CBUAE, to facilitate future conversions between USDU and AE Coin, aligning US dollar and dirham payment tokens within the same regulatory framework. To further enhance institutional access to USDU, Universal has chosen Aquanow as its global distribution partner. Aquanow is regulated under Dubai’s Virtual Assets Regulatory Authority (VARA) and will help integrate USDU into regulated digital asset infrastructure, encompassing various use cases.

While USDU serves as a viable option for UAE domestic payments related to digital assets, it’s important to note that it isn’t permitted for general retail payments in the mainland, where dirham-denominated instruments remain the standard. This nuanced regulatory landscape highlights the evolving nature of digital currencies in the UAE and their potential role in the broader financial ecosystem.

The launch of USDU marks a significant milestone in the UAE’s efforts to embrace digital assets and enhance financial innovation. It also underscores the importance of regulatory clarity, which can pave the way for greater adoption of cryptocurrencies and stablecoins in the region.