The UAE Central Bank has approved USDU, a US dollar-backed stablecoin issued by Universal Digital, for compliant crypto settlements, marking a significant step in the country’s financial sector innovations.
USDU’s approval highlights the UAE’s commitment to regulated digital currencies, potentially attracting institutional interest and impacting the global stablecoin market by enhancing cross-border transaction efficiencies.
UAE Central Bank Endorses USDU for Crypto Settlements
The Central Bank of the UAE approved USDU as the first foreign payment token for compliant crypto settlements. Universal Digital, based in Abu Dhabi, issues the USDU backed by 1:1 reserves in partnered banks.
This approval came under the Payment Token Services Regulation, allowing USDU’s institutional use in cross-border settlements. Key players include Emirates NBD, Mashreq, and Aquanow, serving as the global distribution partner.
USDU Approval Boosts Confidence in Digital Asset Regulation
The approval of USDU aims to foster institutional confidence in regulated digital assets within the UAE. Banking leaders describe it as a timely step for the crypto market, addressing the growing demand for regulatory clarity. According to Juha Viitala, CEO of Universal Digital, “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.”
USDU targets a reduction in cross-border settlement costs, enhancing MENA’s global stablecoin competitiveness. There is no reported impact on major cryptocurrencies or market liquidity following this decision.
USDU Approval Builds on UAE’s 2024 Stablecoin Initiative
The UAE’s similar approval of an AED-pegged stablecoin in 2024 set a precedent for local trading pairs. The USDU approval represents a continuation of regulatory innovation in currency settlement mechanisms.
According to experts, the success of USDU largely depends on institutional uptake and technological assimilation. Its trajectory will serve as a benchmark for future regulatory-approved stablecoins in emerging markets.
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