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The UAE introduced its Central Bank framework for fiat-backed tokens in June 2024, offering issuers regulatory clarity well before many peer markets developed comparable rules, according to an Arthur D. Little analysis reported by CoinEdition. Analyst Mohammad Nikkar told the outlet that this early action, combined with a deliberate policy allowing dollar and dirham-backed stablecoins to operate in parallel roles, has distinguished the UAE’s approach. Large financial institutions provided support from the outset, further accelerating development in the sector.
Nikkar explained that the structure avoids pitting dollar stablecoins against local-currency versions by assigning the former primarily to international payments and the latter to domestic transactions. The UAE dirham’s longstanding peg to the U.S. dollar enhances the model, enabling dirham stablecoins to deliver comparable economics while falling under full local regulation, the assessment noted. A prohibition on algorithmic stablecoins, which maintain value through supply adjustments rather than reserves, has additionally increased confidence among banks and institutional players.
Under the Central Bank of the UAE’s Payment Token Services Regulation, domestic settlement of digital assets and derivatives is restricted to fiat currency or registered foreign payment tokens. Universal Digital Intl Limited secured registration for its USDU token in January 2026, marking the first such Central Bank-approved USD stablecoin for this purpose, a report from The Startup Scene detailed. The token maintains one-to-one backing by U.S. dollars held in safeguarded accounts at Emirates NBD and Mashreq, with monthly attestations performed by a global accounting firm.
The dirham-backed DDSC stablecoin, a joint initiative of International Holding Company, Sirius International Holding and First Abu Dhabi Bank, has expanded its reach following Central Bank approval for listing on select Virtual Assets Regulatory Authority platforms. The National reported on July 5, 2026 that DDSC had already processed more than $41 million in transactions since launch, with the latest steps aimed at facilitating retail use for payments such as shopping and peer transfers. This development builds on the token’s initial focus on institutional and corporate applications.
Federal Decree-Law No. 6 of 2025, which took effect in September 2025, broadened the Central Bank of the UAE’s authority to encompass payment services involving virtual assets alongside other activities. A Neo Legal overview of UAE crypto regulation through the first half of 2026 identified a September 2026 compliance deadline for DeFi, stablecoin and related payment infrastructure, applying rules according to economic function irrespective of underlying technology. The law integrates with earlier frameworks including the Payment Token Services Regulation to create a unified supervisory environment.
Abu Dhabi Global Market finalised an expanded regime for fiat-referenced tokens effective January 1, 2026, incorporating custody, intermediation and acceptance as distinct regulated activities, according to a Gibson Dunn cross-border guide to stablecoin rules issued in March 2026. The updates complement onshore Central Bank measures while maintaining distinctions between dirham payment tokens for retail use and foreign tokens for specific settlement functions. Planned conversion mechanisms between USDU and the licensed dirham stablecoin AECoin are intended to streamline domestic operations, the Startup Scene report added.
