Author: Nancy, PANews
Since BUSD faced regulatory suppression and faded from the center of the stablecoin stage last year, the issuer Paxos had to adjust its strategy and strengthen compliance construction. Recently, Paxos announced the issuance of the compliant stablecoin network Global Dollar Network (USDG) in Singapore, gaining support from several crypto giants and promoting the widespread application of this stablecoin through reserve income distribution.
Compliance stablecoin approved by the Monetary Authority of Singapore, introducing a reserve income distribution mechanism.
After obtaining formal approval from the Monetary Authority of Singapore (MAS), Paxos announced the launch of the compliant dollar stablecoin USDG at the beginning of this month. Currently, this stablecoin operates on the Ethereum blockchain and will expand to other public chains based on regulatory developments in the future.
USDG is supported by a 1:1 dollar reserve, which includes dollar deposits, short-term U.S. government bonds, and other cash equivalents. DBS Bank, the largest bank in Singapore by assets, serves as the primary banking partner for USDG, responsible for managing its dollar reserves.
Paxos plans to release the first attestation report for USDG in November, which is expected to be issued by an independent third-party accounting firm, Enrome LLP. This review will be conducted based on standards set by the Singapore Chartered Accountants Association. To build community trust and ensure that financial data is fully transparent and reliable, Paxos commits to publishing attestation reports monthly thereafter.
In the fierce competition among various compliant stablecoins, USDG has also introduced an innovative income distribution mechanism to enhance competitiveness. "Stablecoins are reconstructing the financial system and fundamentally changing how people interact with the dollar and payment methods. However, current mainstream stablecoins are not regulated and retain all the income from reserve assets. USDG is actually a community token that returns almost all profits to participants, and anyone can join. The network aims to incentivize stablecoin usage globally and accelerate the socialization of this technology," said Paxos co-founder and CEO Charles Cascarilla.
Unlike mainstream stablecoins like Tether (USDT) and Circle (USDC), USDG allows its partners to earn up to 100% of the profits, which come from assets supporting USDG on the platform. USDG will distribute rewards based on different participation methods of partners and the liquidity created within the network, with custodians, exchanges, payment technology companies, and other financial institutions eligible to join through official invitations.
Currently, the partners announced by USDG include Anchorage Digital, Bullish, Galaxy Digital, Kraken, Nuvei, Paxos, and Robinhood.
Strengthen compliance construction and promote the expansion of the stablecoin landscape.
Paxos is an important player in the stablecoin market, having received regulatory licenses from the New York Department of Financial Services (NYDFS), the Monetary Authority of Singapore (MAS), and the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market, issuing assets including USDP, PAXG, BUSD, PYUSD, USDL, and USDG.
Among them, BUSD, which once occupied an important market position, suffered greatly after being investigated by multiple U.S. regulators in 2023. Although the SEC announced in July this year that it would abandon its investigation of Paxos and determined that BUSD is no longer a security, the market share of this stablecoin has been consumed by other competitors, and it has also brought significant impacts on Paxos's reputation and business.
In the face of this challenge, Paxos has also been actively exploring more cooperation opportunities and business models this year. For instance, in January, the stablecoin USDP was officially launched on the Solana network; in June, Paxos introduced a yield-bearing stablecoin, Lift Dollar (USDL), pegged to the dollar and regulated by the United Arab Emirates (UAE); in October, Paxos announced the launch of a stablecoin payment platform to provide stablecoin payment and withdrawal services for payment providers and merchants; the same month, Paxos announced plans to integrate with the Stellar network, aiming to bring assets to the Stellar network by the end of 2024.
Moreover, in June this year, to focus resources more on core businesses such as tokenization and stablecoins, Paxos made strategic layoffs. Nevertheless, Paxos still emphasizes its robust financial status, holding over $500 million in its balance sheet.
Additionally, Paxos has brought in talent with regulatory backgrounds to further strengthen its compliance system. For example, in May this year, 'crypto godfather' and former CFTC Chairman J. Christopher Giancarlo joined the Paxos board to provide guidance and advice to the issuer.
"Blockchain and stablecoins are reshaping the financial system, enabling it to coexist with the internet. Stablecoins or digital dollars (dollars digitized through blockchain technology) are a key upgrade to the payment system, which will fundamentally change the flow of currency, allow more people to participate in the global economy, and ensure the dominance of the dollar in the coming years." Recently, Charles Cascarilla reiterated the significant impact of stablecoins on the future of the dollar in an open letter to major presidential candidates in the U.S.
