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Abu Dhabi-based Universal Digital has become the first company to register a US dollar-backed stablecoin with the UAE Central Bank, launching USDU under the country’s Foreign Payment Token framework.
The approval, announced today, makes USDU the only dollar stablecoin formally compliant with UAE payment token rules established under the Payment Token Services Regulation.
The launch answers a growing demand from regulated institutions in the UAE for a compliant digital dollar instrument that can be used for settlement of digital assets and derivatives. While global stablecoins are widely used in the country, none had previously secured registration as a UAE payment token.
According to Universal Digital, the registration makes the company the UAE’s first Foreign Payment Token Issuer and establishes a regulated US dollar-denominated settlement option within the country’s financial system.
The move underscores the UAE’s strategy of encouraging digital asset innovation while maintaining strict regulatory oversight through the central bank and financial free zones.
Juha Viitala, senior executive officer of Universal Digital, said the PTSR created a pathway for issuers to transition into compliance, adding that USDU was the first to complete that process.
“Among all the USD stablecoins, USDU was the first to obtain such registration,” — Juha Viitala, Senior Executive Officer, Universal Digital.
Universal Digital operates under dual regulatory oversight, a structure that reflects the layered approach of the UAE payment token regime.
The company is regulated by Abu Dhabi Global Market’s Financial Services Regulatory Authority (FSRA), which has granted it permission to issue a fiat-referenced token. At the same time, Universal is registered with the CBUAE for payment-token activities.
Viitala said this combination raised the bar for issuers operating under the UAE payment token system.
“This dual oversight imposes a higher level of discipline across reserve custody, governance, disclosures, and operational controls,” — Juha Viitala, Senior Executive Officer, Universal Digital.
He added that the difference is particularly important for institutional users because “registration provides a clearer compliance pathway for certain regulated use cases.”
Under the PTSR, payments for digital assets and digital asset derivatives in the UAE may only be conducted using fiat currency or a Registered Foreign Payment Token. This rule gives the UAE payment token designation practical significance, not just symbolic value.
Banks, brokers, and licensed trading venues can now integrate a central-bank-registered US dollar token directly into their compliance, settlement, and reporting workflows.
Although stablecoins such as Tether’s USDt and Circle’s USDC are widely used by UAE-based traders through exchanges and over-the-counter desks, they are not registered under the CBUAE’s payment token regime.
As a result, USDU is currently the only US dollar stablecoin that fully meets UAE payment token requirements for regulated digital asset transactions, according to Viitala.
USDU is issued as an ERC-20 token on the Ethereum blockchain and is designed primarily for institutional and professional users, rather than retail payments.
The token follows a conservative reserve model intended to align with the expectations of regulators and financial institutions operating within the UAE payment token framework.
The reserves backing USDU are held 1:1 in US dollars in safeguarded onshore accounts at Emirates NBD and Mashreq. Mbank serves as a strategic corporate banking partner, while a global accounting firm provides monthly independent attestations of the reserves.
Viitala emphasized that confidence in a UAE payment token depends on more than blockchain technology alone.
“User confidence stems from the combination of regulated banking custody, recurring third-party attestations, and regulatory oversight,” — Juha Viitala, Senior Executive Officer, Universal Digital.
He noted that while banking partners provide custody and safeguarding, the issuer remains responsible for meeting all regulatory obligations.
This reserve structure is intended to reassure institutions that the UAE payment token is fully backed and transparent, a key concern for regulators globally as stablecoins become more integrated into financial markets.
To expand institutional access, Universal Digital has appointed Aquanow, a firm regulated under Dubai’s Virtual Assets Regulatory Authority (VARA), as its global distribution partner. Aquanow will support integration of USDU into regulated digital asset infrastructure, including on- and off-ramps and settlement systems, strengthening the role of the UAE payment token in cross-border and domestic institutional use cases.
Universal is also working with AE Coin, a dirham-denominated stablecoin licensed by the CBUAE, to enable future conversion between USDU and AE Coin. This would allow alignment between US dollar and dirham payment tokens within the same regulatory perimeter, reinforcing the UAE payment token ecosystem.
Despite its regulatory status, USDU has defined limits. While it can be used for domestic payment of digital assets and derivatives within the UAE, it is not permitted for general retail payments on the mainland, where dirham-denominated instruments remain the standard.
This distinction reflects the central bank’s cautious approach as it expands the UAE payment token framework without displacing traditional retail payment systems.
Taken together, the launch of USDU highlights how the UAE payment token regime is moving from policy to practice, offering a regulated alternative for institutions while maintaining strict controls. As more issuers seek approval, USDU’s registration sets an early benchmark for compliance in the region’s evolving digital finance landscape.
