As an analyst with a background in fintech and stablecoins, I find Paxos International’s new interest-bearing stablecoin, USDL, to be a game-changer in the market. With regulations from the Abu Dhabi Global Market (ADGM) and its unique yield distribution mechanism, USDL is poised to attract institutional and retail investors looking for a regulated and yield-generating stablecoin.
Paxos’s global division, Paxos International, is introducing a new digital currency named Lift Dollar (USDL), which is pegged to the US dollar and offers interest.
As a crypto investor, I’d describe it like this: In the Abu Dhabi Global Market (ADGM), my USDL stablecoin investments will be subject to regulation. Simultaneously, Paxos International manages the reserves supporting the USDL, and they pass on the interest earnings from these reserves back to me as yield.
An Interest-Bearing Stablecoin
The US Dollar Stablecoin (USDL) from Paxos will be fully collateralized with a 1:1 ratio of U.S. government securities and cash equivalents, as mandated by the Financial Services Regulatory Authority in the ADGM. In contrast to earning interest on reserves, Paxos will levy an issuer fee for the creation of USDL tokens. Notably, USDL will be accessible in Argentina via Ripio, Buenbit, Manteca, and Plus Crypto, making it the first regulated stablecoin that offers interest-bearing capabilities to users. Typically, stakeholders of stablecoins generate returns through activities such as yield farming, staking, and re-staking.
US DL stands out in the market as it allows token holders to generate passive income through lending their funds to high-quality, short-term U.S. government securities and cash equivalents. These assets are held under the secure custody of the Financial Services Regulatory Authority (FSRA), ensuring safety and compliance with regulations. Similar to other Paxos-issued USD stablecoins, US DL maintains a 1:1 value ratio. It is issued freely on the Ethereum blockchain and distributes daily yield payments automatically to token holders.
holders, subject to the reserve assets fully backing the total value of USDL in circulation.”
Through an Ethereum smart contract, the yield on USDL will be automatically disbursed, utilizing a mechanism known as rebasing. This yield is contingent upon current market circumstances.
Limited Availability
People living outside the ADGM in countries such as the United States, the United Kingdom, Canada, the European Union, Hong Kong, Japan, Singapore, and the United Arab Emirates will not have access to USDL offered by Paxos International, with the exception of those residing in the ADGM.
As an analyst, I would rephrase it this way: “I’m unable to register the digital assets mentioned in this text under the US Securities Act of 1933. Consequently, they cannot be offered or sold within the United States, except through a specific exemption from registration.”
As a financial analyst, I would rephrase it as follows: I currently work with Paxos in producing three stablecoins: PayPal USD (PYUSD), Pax Dollar (USDP), and Pax Gold (PAXG). These digital currencies are issued under the close supervision of the New York Department of Financial Services (NYDFS). Previously, we also produced Binance USD (BUSD), but this collaboration was recently put on hold following warnings from both the NYDFS and the United States Securities and Exchange Commission regarding potential securities law violations.
ADGM’s Rapid Growth
The Abu Dhabi Global Market (ADGM), established in 2013, is a free economic zone known for its progressive approach. It has released extensive guidelines and regulations concerning distributed ledger technology (DLT). Moreover, ADGM entered into a collaboration with Solana to advance DLT technology. As a result, there has been a significant surge of crypto companies joining the ADGM community. Some notable firms, such as Chainalysis, Blockdaemon, Rain, M2, Binance FZE, Laser Digital, and QCE Capital, have been granted licenses to operate and provide their services within the ADGM.
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2024-06-07 00:02