On January 29, the Central Bank of the United Arab Emirates (CBUAE) officially approved the USD-pegged stablecoin USDU, making it the first dollar-backed stablecoin authorized under the country’s Payment Token Services Regulation (PTSR) framework. This approval marks the first time a stablecoin has achieved compliant operation within a central bank–led payment regulatory system, positioning the UAE ahead of many major economies in stablecoin regulatory practice.
USDU is issued and managed by Universal Digital, which is regulated by the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM). Its issuance and operational activities are fully incorporated into the UAE’s established financial regulatory framework.
Reserve Structure Integrated with the Banking System
According to disclosed information, USDU’s reserves are held on a 1:1 basis in safeguarded accounts within the UAE. Partner banks include Emirates NBD, Mashreq, and Mbank. This arrangement underscores the importance of asset segregation and fund security, directly addressing long-standing regulatory concerns around reserve transparency and redemption risk.
By integrating with major domestic banking institutions, USDU’s operational model aligns more closely with traditional payment infrastructure, providing a practical foundation for stablecoin usage in regulated environments.
Cross-Border Use and Compliance Expansion
Beyond issuance, digital asset infrastructure firm Aquanow has been appointed as USDU’s global distribution partner, supporting institutional use outside the UAE under applicable compliance requirements. This indicates that USDU’s application may gradually extend beyond domestic payments to cross-border settlement and institutional fund flows.
Given the divergence in regulatory standards across jurisdictions, such cross-border usage places higher demands on transaction traceability, fund flow transparency, and ongoing compliance oversight.
Risk Governance Under Evolving Stablecoin Regulation
Overall, the approval of USDU reflects a broader shift in which stablecoins are moving from largely unregulated innovation toward institutionalized regulatory oversight. Direct central bank involvement in payment token regulation signals that future stablecoin frameworks will impose more systematic requirements in areas such as anti-money laundering, transaction monitoring, and risk control.
Within this context, continuous monitoring of on-chain fund movements and transaction behavior is becoming a core component of stablecoin compliance. Tools such as Trustformer KYT, which focus on transaction traceability and risk identification, provide essential infrastructure support for the long-term operation of stablecoins within regulatory frameworks—helping the market strike a balance between innovation and financial stability.