UAE central bank approves first USD-backed stable coin

Context: The Central Bank of the United Arab Emirates has approved the first USD-backed stable coin (USDU) under its Payment Token Services Regulation, marking a major step in regulating digital assets.

About UAE central bank approves first USD-backed stable coin:

What is the USD-backed stablecoin (USDU)?

• A USD-backed stablecoin is a cryptocurrency pegged 1:1 to the US dollar, designed to maintain price stability while operating on blockchain networks.
• The newly approved USDU stablecoin is issued by Universal Digital, a crypto firm regulated by the Abu Dhabi Global Market (ADGM), making it the first foreign payment token issuer registered with the UAE central bank.

Key features of the USDU stablecoin:

• Full USD backing: Each token is backed by US dollar reserves, ensuring price stability.
• Regulated framework: Approved under the UAE’s Payment Token Services Regulation.
• Blockchain-based settlement: Enables faster, cheaper, and transparent digital payments.
• Cross-border utility: Suitable for international transfers, trade settlement, and remittances.
• Financial innovation: Bridges traditional finance with digital asset infrastructure.

About the United Arab Emirates (UAE):

What is the UAE?

• The United Arab Emirates is a federal union of seven emirates located along the eastern coast of the Arabian Peninsula.
• It is one of the Middle East’s most influential economies, known for oil wealth, global finance, logistics, and technological innovation.

Capital: Abu Dhabi – political centre and hub of the oil industry.

Neighbouring countries:

• Saudi Arabia – west and south
• Oman – east and northeast
• Maritime proximity to Iran across the Strait of Hormuz

Key geographical and geological features:

• Predominantly arid desert landscape with extensive sand dunes.
• Hajar Mountains in the northeast (shared with Oman), rising to ~2,000 m.
• Long coastlines along:
  • Persian Gulf (west)
  • Gulf of Oman (east – Fujairah is the only emirate here)
• Strategic location near the Strait of Hormuz, a critical global oil transit chokepoint.
• Absence of perennial rivers; drainage through seasonal wadis.

Strategic importance of the UAE:

• Controls vital maritime routes connecting the Indian Ocean and Persian Gulf.
• Major player in global energy markets, logistics, aviation, and finance.