Regulation
Cryptocurrency trading firm Paxos introduces USDL yield stablecoin
Cryptocurrency trading platform Paxos has introduced a USD-denominated yield-generating stablecoin called Lift Dollar (USDL), regulated in the United Arab Emirates (UAE), the company said on Wednesday.
The stablecoin is issued by Paxos International, the company’s division in the United Arab Emirates, and regulated by the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM).
Major stablecoin issuers, such as Tether and Circle, collect billions of dollars in interest on the Treasury bonds they hold, which has led to the creation of several profit sharing stablecoins and blockchain-based US Treasury products.
Paxos CEO Charles Cascarilla said the new Lift Dollar is structured the same as the other stablecoins his company issues: PayPal USD (PYUSD), Pax Dollar (USDP), and Pax Gold (PAXG). These are matched 1:1 to dollars, backed by short-term U.S. government bonds, and all are overseen by a prudential regulator with all assets safely positioned, away from a potential default situation, he said.
“We added programmatic daily return so that it looks a little more like a savings product than a checking account, which is maybe the way to think about traditional stablecoins,” Cascarilla said in an interview. “[USDL] is taking it one step further from democratizing access to dollars, to also democratizing the risk-free rate, in the safest way possible.”
Paxos USDL will not be available in the United States due to lack of regulatory guidance.
At launch, USDL will have a particular focus on Argentina, where it will be available to consumers through distribution partners Ripio, Buenbit and TiendaCrypto, according to a press release.
“For the launch we are waiving 30 basis points (bips) of our asset management fee. So we only hold back 20 beeps, which means users will get more than 5%,” Daya said in an interview.