On January 29, 2026, the Central Bank of the UAE approved the inclusion of the dollar-denominated USDU into its payment regulatory framework, quickly attracting attention in the GMT+8 market. This decision signifies that, for the first time, a dollar-denominated token aimed at the open market is integrated into the central bank payment system, rather than being confined to exchanges and on-chain native ecosystems. With this unprecedented arrangement, questions arise: Why did the UAE choose to bet on USDU at this time? Who will operate and endorse it? How will it rewrite the path of dollar cross-border circulation, and what profound impacts will it have on the global crypto industry and the structure of dollar financial hegemony?
The Moment the Central Bank Nodded: USD…
● Participants and Regulatory Nesting: The approved USDU is operated by Universal Digital, whose entity is regulated by the Abu Dhabi Global Market (ADGM) Financial Services Regulatory Authority, coexisting within the same regulatory framework as traditional licensed financial institutions. This means that USDU is not a "shadow currency" outside the chain, but is placed within the existing compliance structure of Abu Dhabi, and is connected to a broader payment system through the UAE Central Bank's payment regulatory framework.
● Path to Inclusion in PTSR (To Be Verified): According to the "to be verified" information in the briefing, USDU is included in the UAE Central Bank's Payment Token Service Regulatory Framework (PTSR), becoming one of the dollar-denominated tokens operating under this framework. Since the central bank has not yet publicly disclosed the detailed terms and technical requirements of the PTSR, we can only confirm that its regulatory positioning is roughly on the track of a "payment tool" rather than a pure investment asset, with specific entry thresholds, risk weights, and operational restrictions still pending official disclosure.
● Symbolic Significance of First Implementation: Golden Finance cites market views that this is the first formal landing of a dollar-denominated token in the central bank payment system, seen as a systemic connection between traditional financial infrastructure and on-chain currency forms. For the crypto market, this is not just a new trading target, but a signal that the central bank views "on-chain dollar circulation" as a regulatory-compliant and usable payment tool, reinforcing the UAE's image as "regulatory-friendly but not laissez-faire" in the digital asset field.
1:1 Dollar Backing: USDU…
● 1:1 Dollar Reserve Commitment (To Be Verified): According to existing information, USDU is claimed to be supported by 1:1 dollar reserves, meaning that each USDU theoretically corresponds to one dollar of real-world asset reserves. However, this commitment is marked as "to be verified" in the briefing, and there is currently no public confirmation from the central bank or independent auditing institutions regarding its reserve structure and adequacy. Therefore, beyond the halo of regulatory recognition, whether USDU can maintain sufficient redemption capability in the long term still depends on subsequent disclosures and audits.
● Onshore Bank Custody vs. Offshore Model Differences: The briefing shows that USDU's fund custody arrangements fall under the protected accounts of onshore banks such as the UAE National Bank and Mashreq, contrasting with some dollar-denominated tokens relying on offshore custodial banks or money market instruments. Onshore custody means that reserve funds are directly included in the regulatory view of the UAE banking system, enhancing the central bank's intervention and risk management operational space, but also binding it more closely to local regulatory and geopolitical risk environments.
● Transparency Gaps and Unknown Risks: Currently, USDU's reserve scale, asset composition, audit frequency, and auditing institutions have not been disclosed, and the briefing explicitly prohibits speculation or fabrication regarding these key details. Therefore, while terms like "1:1 reserves" and "protected accounts" help build market confidence, the lack of systematic disclosure and audit reports means that USDU still faces real constraints in transparency, which will directly affect its adoption depth among institutions and large funds.
From Payment Token Regulations to Implementation Cases…
● Policy Design with Preset Regulatory Runway: Before USDU was approved, the UAE had already passed the Payment Token Service Regulations, establishing a regulatory runway for various fiat-denominated payment tokens. The core idea of this regulation is to view such tokens as part of the payment infrastructure rather than purely speculative assets, pre-defining their issuance business, custody requirements, anti-money laundering, and sanctions compliance obligations, providing a regulatory template for subsequent project approvals.
● USDU as a Demonstrative Product: The inclusion of USDU in the central bank payment regulatory framework is, in fact, one of the first cases of the Payment Token Service Regulations being implemented from the top down. As a released pioneer, it not only provides a visual sample for the UAE's narrative of "becoming a global digital asset center," but also sends a signal to potential issuers—if products are designed along established regulatory paths, there is an opportunity to gain legal status within the central bank system, rather than being excluded from financial infrastructure.
● Contrast with Hesitation in Europe and the US: In Europe and the US, most regulatory agencies are still engaged in tug-of-war over the legal attributes and systemic risks of dollar-denominated tokens, with legislation and central bank attitudes appearing more cautious and even contradictory. In contrast, the UAE has gained a clear first-mover advantage in regulatory friendliness and policy certainty by proactively issuing the Payment Token Service Regulations and providing a landing channel for USDU, reinforcing its positioning as "emerging but proactive" in the global financial landscape.
New Dollar Channel: USDU Will Attract…
● Potential Sources of Funds Profile: After USDU's approval, the most immediate focus comes from the potential influx of foreign institutional and family office funds. For some investors seeking exposure to dollar assets while wanting to engage with on-chain tools within a compliant framework, entering USDU through UAE licensed institutions and the central bank regulatory framework may become an intermediate path between traditional dollar deposits and fully unregulated tokens, but specific fund sizes and institutional names are currently not publicly available.
● Alternative Options to Traditional Clearing Systems: Compared to traditional dollar clearing paths relying on SWIFT and correspondent banking networks, on-chain USDU has inherent advantages in settlement speed, cross-time zone operations, and fragmented payment scenarios. At the same time, inclusion in the central bank payment regulatory framework means it must remain compliant at the KYC/AML level, which may incur higher costs than some unregulated issued tokens, but also provides institutional funds with a more acceptable risk-reward balance, with fund migration potentially presenting a "high-compliance funds first" gradual structure.
● Limited Role Information of Aquanow: The briefing indicates that the digital asset infrastructure company Aquanow has been appointed as the global distribution partner for USDU, but this information source is singular and does not disclose its specific responsibilities and commitments in clearing, market-making, or technical support. It can be confirmed that USDU will leverage third-party professional institutions to assist in distribution at the global circulation level, but beyond the public description of "distribution partner," the business model and profit arrangements remain unknown.
Central Bank System Partners with Stablecoins: Who is…
● Competition and Cooperation between Traditional Finance and New Tools: From the perspective of commercial banks, payment institutions, and existing dollar-denominated token issuers, the emergence of USDU constitutes both competition and potential collaboration. For banks, some cross-border payment and corporate settlement needs may shift to the USDU channel, compressing traditional fee space; however, banks can also reinsert themselves into on-chain circulation through custody, exchange, and settlement services, generating new business income. For existing dollar-denominated token issuers, USDU's position within the central bank system may capture part of the "compliance demand" market.
● The Double-Edged Effect of Risk Control and Regulation: The central bank payment system's acceptance of dollar-denominated tokens brings cross-border payments, compliance risk control, and anti-money laundering monitoring into a new technical paradigm. On one hand, the traceable characteristics of on-chain transactions help enhance transaction visualization and real-time monitoring in a permitted environment; on the other hand, if standards are not set properly, funds may frequently migrate between tokens and traditional accounts across different jurisdictions, posing new challenges for regulatory coordination and sanctions enforcement. Finding a balance between efficiency enhancement and risk spillover will be a long-term challenge for USDU.
● Regional Demonstration and Regulatory Game: The UAE's initiative to introduce dollar-denominated tokens within the central bank system has a clear demonstrative effect on other Middle Eastern and emerging market central banks. For countries seeking to attract dollar funds while wanting to develop local digital asset centers, the USDU model provides a replicable sample. However, on a more macro level, this move also exerts potential pressure on the US and EU—the standards and discourse power of dollar-denominated tokens are ultimately held by the issuing country of the local currency or by third-party financial centers that actively embrace new financial infrastructure, becoming a new focal point of contention.
Starting from Abu Dhabi: Global Stability…
The inclusion of USDU in the payment regulatory framework by the UAE Central Bank marks a significant node in the long-term trend of "crypto-form currencies being absorbed into the central bank system." It demonstrates that, under clearly defined regulatory terms and local bank custody arrangements, dollar-denominated tokens can become part of the payment infrastructure rather than merely speculative chips. However, at the same time, the lack of reserve transparency, missing audit details, and the reality of cross-border regulatory coordination remind the market not to easily mythologize it as the ultimate solution.
In the future, more compliant tokens denominated in sovereign currencies, issued by local or multinational institutions, may gradually emerge in different jurisdictions: some directly pegged to local currencies, some serving specific cross-border corridors, and others focusing on operating on permissioned chains. The step taken by Abu Dhabi at this moment may just be the beginning. What truly determines how far USDU can go remains threefold uncertainty: whether reserve and risk disclosures can meet institutional standards, whether cross-border compliance and anti-money laundering can form an actionable consensus among multiple countries, and whether, in a period of heightened geopolitical tension, dollar-denominated tokens will be seen as an extension of American financial power or be reshaped by third-party financial centers into a new dollar channel.
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