Paxos International, the international arm of Paxos, is issuing a US dollar-pegged, interest-bearing stablecoin called the Lift Dollar (USDL).
The USDL stablecoin will be regulated in the Abu Dhabi Global Market (ADGM) and pay yield on the interest earned by Paxos International on the reserves backing the stablecoin.
An Interest-Bearing Stablecoin
USDL will be backed 1:1 by liquid US Government Securities and cash equivalent reserve assets being held per the requirements of the ADGM’s Financial Services Regulatory Authority. Paxos International will charge an issuer fee for the token instead of earning interest on the reserves. The USDL stablecoin will also be available in Argentina through Ripio, Buenbit, Manteca, and Plus Crypto. Paxos hailed USDL as the first interest-bearing, regulated stablecoin. Stablecoin owners generally earn interest through yield farming, staking, and restaking.
“USDL is unmatched in the market as holders earn overnight yield from short-term, high-quality liquid US government securities and cash equivalent reserve assets held under the safe protection and custody requirements of the FSRA. This reserve structure is like other Paxos-issued US dollar stablecoins that are backed 1:1 in value. USDL is issued permissionlessly on Ethereum and pays yield programmatically on a daily basis to token
holders, subject to the reserve assets fully backing the total value of USDL in circulation.”
It will distribute yield on USDL automatically through an Ethereum smart contract using a mechanism called rebasing. The yield will be based on prevailing market conditions.
Limited Availability
However, USDL will not be available to residents of the United States, the United Kingdom, Canada, the European Union, Hong Kong, Japan, Singapore, and the United Arab Emirates outside the ADGM. Paxos International stated,
“The digital assets referred to herein have not been and will not be registered under the US Securities Act of 1933, as amended, and may not be offered or sold in the US, except pursuant to an applicable exemption from registration.”
Paxos currently mints PayPal USD (PYUSD), Pax Dollar (USDP), and Pax Gold (PAXG) under the regulatory authority of the New York Department of Financial Services (NYDFS). It also minted Binance USD (BUSD) until recently. However, this was stopped after the NYDFS and the United States Securities and Exchange Commission threatened legal action against Paxos for issuing an unregistered security.
ADGM’s Rapid Growth
The Abu Dhabi Global Market is a free economic zone that was set up in 2013. It issued comprehensive guidelines and regulations for distributed ledger technology (DLT) and announced a partnership with Solana to develop DLT technology. The ADGM has seen a rapid influx of crypto firms, including Chainalysis and Blockdaemon. Other companies such as Rain, M2, Binance FZE, Laser Digital, and QCE Capital have received licenses to set up operations and offer their services in the ADGM as well.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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