The UAE Central Bank has approved its first regulated US dollar-based stablecoin, USDU, marking a major development in digital payments infrastructure in the Middle East. 

The issuance and management of the USDU token will be handled by Abu Dhabi-based stablecoin issuer Universal Digital, which is regulated by the Financial Services Regulatory Authority of Abu Dhabi Global Market (ADGM), according to a statement from the companies released Wednesday. 

USDU is the first US dollar-backed stablecoin to be registered as a Foreign Payment Token under the UAE’s Payment Token Services Regulation (PTSR). The cryptocurrency is backed by dollars held in reserve at major UAE banks. The new stablecoin has secured backing from major local lenders, including Emirates NBD, Mashreq and Mbank, and is designed to bring institutional-grade legal clarity to digital asset transfers across the UAE.

A stablecoin is a type of cryptocurrency designed to maintain a stable value by being pegged to an external asset, most commonly a fiat currency such as the US dollar. As a result, stablecoins tend to be far less volatile than other crypto assets such as Bitcoin and Ethereum.