Kraken, Galaxy Digital, and Robinhood back USDG via Global Dollar Network

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As a seasoned crypto investor with over a decade of experience navigating the turbulent waters of digital assets, I find the latest development surrounding the Global Dollar stablecoin quite intriguing. The collaboration between prominent players such as Kraken, Galaxy Digital, and Robinhood to back this regulated yield-bearing stablecoin is a clear sign of the industry’s maturation.

Notable companies specializing in cryptocurrencies such as Kraken, Galaxy Digital, and Robinhood have come together to support the Global Dollar – a stablecoin offering interest and overseen by Paxos, a recognized stablecoin issuer.

As per a declaration made on November 5th, Paxos, collaborating with Anchorage Digital, Bullish, Galaxy Digital, Kraken, Nuvei, and Robinhood, has debuted the Global Dollar Network – an alliance supporting USDG, a recently introduced dollar-backed stablecoin, issued from Singapore.

On October 31, USDG was introduced, a digital currency supported by reserves made up of liquid U.S. dollar investments such as deposits, short-term government securities, and other equivalent forms of cash. This stablecoin adheres to Singapore’s upcoming regulatory framework for stablecoins and is overseen by the Monetary Authority of Singapore.

Under the guidance of Paxos Digital Singapore, a branch of the company, the stablecoin has been created and is at present only compatible with the Ethereum blockchain. However, they aim to broaden its reach to additional networks and grow globally as regulations surrounding stablecoins become more established.

In a partnership role, Paxos enlisted Singapore’s largest bank, DBS, to oversee their reserve assets. This setup guarantees that the stablecoin can be exchanged for traditional currency (fiat).

As stated by Kraken’s co-CEO Arjun Sethi, insufficient competition within the stablecoin market has hindered it from realizing its full capacity. The introduction of USDG aims to rectify this situation by offering a fairer model that will attract mainstream users and thereby speed up the development of new applications for it.

The consortium intends to facilitate worldwide usage of the stablecoin, and moreover, encourages the creation of not only cryptocurrency but also a variety of financial services tied to USDG. (This is indicated in the announcement.)

The organization intends to bring in new participants from various industries such as custodians, exchanges, financial tech companies focusing on payments, merchants, protocols, card networks, banks, and investment platforms. At the moment, it operates under an exclusive, invitation-only system.

Members of the consortium will receive rewards stemming from the earnings on USDG’s reserve assets, proportionate to their efforts in enhancing the network’s functionality and interconnectedness.

At present, users can access USDG on platforms like Anchorage Digital, Galaxy Digital, Kraken, and Paxos. Soon, the goal is to make it available through all partner platforms.

In comparison to Paxos’s initial stablecoin, USDG aims to challenge well-established contenders such as Tether and Circle within the stablecoin sector. Presently, Tether dominates this field significantly, holding the lead not just in trading volume but also in market capitalization.

The intensity of the contest may increase significantly as Ripple, a notable figure in the blockchain payments industry, is preparing to launch RLUSD – a stablecoin pegged to the US dollar, backed by US dollar deposits, Treasury bonds, and equivalent liquid assets.

Additionally, it’s worth noting that payment company Stripe is considering entering the market following its recent purchase of a stablecoin provider known as Bridge.

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2024-11-05 10:01