The Central Bank of the United Arab Emirates (CBUAE) has formally approved the issuance of a U.S. dollar-backed stablecoin, marking a significant step in the country’s efforts to integrate digital assets into its financial ecosystem under clear regulatory standards. According to sources, the move positions the UAE as one of the first major Gulf financial hubs to create an officially sanctioned dollar-pegged digital currency.
Under the approval framework, the stablecoin must be fully backed by high-quality USD reserves held in regulated financial institutions, with regular audits and transparency reporting requirements. The central bank emphasised that compliance with anti-money-laundering (AML), Know Your Customer (KYC), cybersecurity, and operational resilience standards will be mandatory for issuers and custodians.
The stablecoin approval is part of the UAE’s broader digital asset strategy, which includes issuing a digital dirham pilot, enhancing blockchain-based payment systems, and attracting fintech innovation. Regulators see dollar-linked stablecoins as a way to facilitate cross-border payments, reduce settlement friction, and deepen integration with global capital markets, especially for trade and remittances.
Officials said the regulatory approach is designed to protect financial stability while fostering innovation. Issuers must demonstrate robust reserve management and governance structures, and any stablecoin launched under the scheme will be subject to ongoing oversight by the CBUAE.
The approval is expected to catalyse institutional participation in digital markets, as USD-pegged tokens are widely used for liquidity provisioning, trading, and settlement across crypto platforms. It also aligns with the UAE’s ambition to become a leading hub for regulated digital finance in the Middle East and North Africa (MENA) region.
The announcement follows similar moves in other jurisdictions seeking to formalise the role of stablecoins under national regulatory frameworks. However, the CBUAE’s guidelines are notable for combining strict reserve requirements with a clear licensing pathway, aimed at reducing risks associated with unbacked or loosely collateralised tokens.
Industry observers say the move may attract global stablecoin issuers and payment firms to the UAE’s financial ecosystem, leveraging its strategic geographic position and favorable regulatory environment.
