Paxos Launches Global Dollar (USDG)
Paxos has introduced the Global Dollar (USDG), a stablecoin backed by the US dollar, strategically designed to align with the regulatory framework set by the Monetary Authority of Singapore (MAS). The launch signifies a notable step towards mainstream adoption of digital currencies in Singapore.
Reserves and Compliance
USDG’s reserves will be held by DBS Bank, which is the largest bank in Southeast Asia and has a well-established reputation for adhering strictly to financial regulations. The first deployment of USDG will be on the Ethereum blockchain, with plans to expand to additional blockchain platforms. This initiative aims to enhance the enterprise adoption of stablecoins by merging regulatory compliance with high liquidity standards.
Why USDG Could Be the Key to Mass Adoption
Designed in accordance with MAS’s stablecoin regulations, USDG is fully backed on a 1:1 basis with US dollars held in high-quality, liquid assets. These include US dollar deposits and short-term governmental securities managed by DBS Bank. Ronak Daya, Paxos’ Head of Product, highlighted the growing interest from enterprises in the stablecoin market, stating, “There has never been a greater interest in stablecoins, yet the market currently lacks a solution integrating regulatory compliance with meaningful economic incentives for businesses.” As Paxos’ primary banking partner, DBS Bank is expected to bolster the credibility and reliability of USDG.
Stablecoin Growth in Singapore
The introduction of USDG aligns with MAS’s recent announcement of a comprehensive framework for stablecoins, placing USDG among the first offerings to adhere to these newly established regulations. A recent report noted that in Singapore, stablecoin transactions surged to an impressive $1 billion in the second quarter, a significant jump from just $161 million earlier in 2023. This growth was mainly attributed to merchant transactions that highlighted the advantages of stablecoins, such as efficiency and cost-effectiveness.
Regulatory Framework and Investor Trust
Singapore’s MAS has instituted a thorough licensing process for stablecoin issuers, ensuring that stability, compliance, and anti-money laundering (AML) protocols are firmly in place to protect the industry. Paxos Digital Singapore received full approval from MAS late last year to offer crypto services, further solidifying its standing as a credible player in the market. This collaboration with DBS Bank is anticipated to foster an atmosphere of trust and stability, making USDG appealing to both digital-centric companies and traditional financial institutions looking to navigate the digital asset landscape.
Expanding the Stablecoin Ecosystem
Since its inception in 2020, Paxos has launched several regulated assets, including PayPal USD (PYUSD), Pax Dollar (USDP), and Pax Gold (PAXG) in the U.S., as well as the Lift Dollar (USDL) in the UAE. Moving forward, Paxos aims to broaden the USDG ecosystem by partnering with key global exchanges, wallets, and various financial platforms. The expansion will support additional blockchain networks beyond Ethereum, aiming to meet a rising need from financial institutions for secure, compliant, and easily accessible digital assets.
Advocating for Digital Asset Regulation
Recently, Paxos CEO Charles Cascarilla wrote an open letter to U.S. leaders including Vice President Kamala Harris and former President Donald Trump, urging for prompt action on digital asset regulations to preserve the U.S. financial position globally. Cascarilla cautioned that the U.S. risks falling behind as jurisdictions like Singapore, the UAE, and the EU adopt favorable regulations that attract capital and talent.
New Payment Solutions for Fintech
Moreover, on October 15, 2024, Paxos unveiled a new stablecoin payment platform aimed at payment service providers (PSPs) and fintech companies, with Stripe as a primary partner. This innovative platform is crafted to streamline global transactions, offering a stablecoin payment framework that facilitates fast and economical international transfers. Users will benefit from Stripe’s integration for processing stablecoin payments that ultimately settle in fiat currency, accompanied by comprehensive support for onboarding, pay-ins, conversions, and payouts.