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Paxos International, the international subsidiary of Paxos, is issuing an interest-bearing stablecoin pegged to the U.S. dollar called the Lift Dollar (USDL).
The USDL stablecoin will be regulated by the Abu Dhabi Global Market (ADGM) and Paxos International will pay interest earned on reserves backing the stablecoin.
E stablecoin
USDL is backed 1:1 by liquid U.S. government securities and cash-equivalent reserve assets in accordance with the requirements of the financial services regulator ADGM. Paxos International charges token issuer fees instead of earning interest on its reserves. USDL stablecoin is also available in Argentina through Ripio, Buenbit, Manteca, and Plus Crypto. Paxos hailed USDL as the first interest-bearing and regulated stablecoin. Stablecoin owners typically earn interest through yield farming, staking, and re-staking.
“USDL is unrivaled in the market because it allows holders to earn overnight returns on short-term, high-quality, liquid U.S. government securities and cash-equivalent reserve assets held in accordance with the safeguarding and custody requirements of FSRA. This reserve structure is the same as other Paxos-issued US dollar stablecoins backed at a 1:1 valuation. USDL is issued permissionless on Ethereum, with proceeds paid into the token programmatically on a daily basis.
Holders can rely on reserve assets fully backing the total value of USDL in circulation.”
It uses a mechanism called rebasing to automatically distribute profits to USDL via Ethereum smart contracts. Rates of return are determined by prevailing market conditions.
limited availability
However, USDL is not available to residents of the United States, United Kingdom, Canada, European Union, Hong Kong, Japan, Singapore, and United Arab Emirates other than ADGM. Paxos International stated:
“The digital assets referenced herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States except pursuant to an applicable exemption from registration.”
Paxos currently issues PayPal USD (PYUSD), Pax Dollar (USDP), and Pax Gold (PAXG), subject to regulatory authority by the New York Department of Financial Services (NYDFS). It also issued Binance USD (BUSD) until recently. However, this was halted after NYDFS and the U.S. Securities and Exchange Commission threatened legal action against Paxos for issuing unregistered securities.
ADGM’s rapid growth
Abu Dhabi Global Market, a free economic zone established in 2013, announced comprehensive guidelines and regulations for distributed ledger technology (DLT) and announced a partnership with Solana to develop DLT technology. ADGM has seen a rapid influx of cryptocurrency companies, including Chainalytic and Blockdaemon. Other companies such as Rain, M2, Binance FZE, Laser Digital, and QCE Capital have also been licensed to set up operations and provide services at ADGM.
Disclaimer: This article is provided for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.
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