Paxos International to issue a regulated interest paying stable coin
Paxos International is issuing an interest-bearing stablecoin called the Lyft Dollar (USDL). The USDL is regulated by the Abu Dhabi Global Market (ADGM) and Paxos International pays an overnight yield on the interest it earns on reserves.
USDL is backed 1:1 by liquid US government securities and cash equivalent reserve assets in accordance with ADGM Financial Services Regulatory Authority requirements. Instead of earning interest on those reserves, Paxos International charges token issuers a fee.
Paxos separately announced that USDL will be available in Argentina through distributors Ripio, Buenbit, Manteca and Plus Crypto.
Paxos claims USDL is the first of its kind.
The Ethereum smart contract uses a mechanism called rebasing to automatically distribute yield on USD based on market conditions. According to Bloomberg, the yield is about 5%. USDL is the first interest-bearing, regulated stablecoin, according to Paxos International. In general, Statcoin holders can generate interest through staking, reshoring and farming.
Related: UAE Central Bank Approves Licensing System for Stable Coin
USDL is not available to non-ADGM residents of the United States, United Arab Emirates, United Kingdom, European Union, Canada, Hong Kong, Japan or Singapore. Paxos International explained:
“The digital assets described 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 United States, independent of applicable registration.”
New York-based Paxos mints People's Dollar (PUSD), Pax Dollar (USDP) and Pax Gold (PAXG) regulated by the New York Department of Financial Services (NYDFS). It also issued Binance USD (BUSD) until the NYDFS and the United States Securities and Exchange Commission threatened to take action against the issuance of an unregistered security.
ADGM is growing rapidly.
ADGM is a free economic zone established in 2013 in Abu Dhabi. In November, it issued regulations for a comprehensive distributed ledger technology (DLT) and partnered with Solana to develop DLT technology in February.
Chainalysis and Blockdaemon have since set up offices there. Digital asset companies such as Rain, M2, Laser Digital, Binance FZE and QCE Capital have been licensed to offer their services at ADGM last year.
Magazine: SEC Sues Do Kwon, Paxos Ready to Sue, SBF's VPN: Hodler's Digest, February 12-18.
