Paxos International, an entity of stablecoin issuer Paxos established in the United Arab Emirates, has launched an interest-rate-earning stablecoin called "Lift dollar" (USDL) and selected Argentina as its first market.
Paxos International said on Wednesday (5th):
“USDL is permissionless and issuable on Ethereum and pays out daily earnings to token holders in a programmatic manner, provided that the total value of USDL in circulation is fully supported by reserve assets.”
Paxos International said USDL is pegged 1:1 to the value of the U.S. dollar, holds only "the highest quality liquid assets" such as U.S. dollar deposits, short-term U.S. Treasury bills and cash equivalents, and is regulated by the Financial Services Regulatory Authority of the Abu Dhabi Global Market (ADGM). (FSRA) regulation.
Charles Cascarilla, a member of the board of directors of Paxos International and co-founder and CEO of Paxos, said in an interview with "The Block" that using USDL, users can get "truly risk-free" rewards. He said Paxos International is a "ring-fenced entity" that does nothing other than issue the stablecoin. Cascarilla also pointed out: "If anything happens to Paxos, these assets will not become part of the bankruptcy proceedings and they will be immediately returned to investors."
Ronak Daya, head of product at Paxos, said in an interview that users can currently earn about 5% on USDL, which is close to the current effective federal funds rate (EFFR). Paxos International uses rebasing technology to distribute earnings, and Daya said users' USDL holdings will increase day by day with earnings. In addition, Daya said that Paxos International will charge a 0.2% distribution fee and a 0.3% issuance fee, and pay the remaining proceeds to users.
USDL is not available in the United States and many jurisdictions
Paxos International is launching its USDL stablecoin first in Argentina through crypto platforms Ripio, Buenbit and TiendaCrypto as its distribution partners.
USDL is not available to residents of certain jurisdictions, including the United States, United Arab Emirates (except Abu Dhabi Global Market), United Kingdom, European Union, Canada, Hong Kong, Japan and Singapore. Cascarilla said the U.S. Securities and Exchange Commission (SEC) may consider interest rate-yielding stablecoins to be a security, which is why its main entity, Paxos, does not offer yields on its existing stablecoin products such as USDP.
Cascarilla said that stablecoins are essentially meant to help people who don’t have bank accounts, lack banking services, or don’t have access to U.S. dollars for various reasons,” noting that USDL will be available to this population around the world in future releases. Daya said:
"We believe the stablecoin market will grow 20 times over the next five years compared to today, and we believe we will be able to capture a large portion of that future growth and gain market share from the existing market leaders."
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This article Paxos UAE subsidiary launches income-based stable currency Lift Dollar (USDL) first appeared on Zombit.
