Paxos International Launches Yield-Bearing Stablecoin USDL in Argentina

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Paxos International, the UAE-based entity of Paxos, has launched a new yield-bearing stablecoin called Lift dollar (USDL), with Argentina chosen as the initial market for its debut. The introduction of USDL marks a significant step in providing financial stability and returns in a volatile economic environment.

Paxos to Offer ‘Risk-Free’ Return 

USDL is designed to offer a “risk-free” return to its holders, providing an annual yield of approximately 5%, comparable to the current effective federal funds rate (EFFR). Charles “Chad” Cascarilla, a board member of Paxos International and CEO of Paxos, highlighted in an interview with The Block that USDL aims to deliver consistent returns by being backed one-to-one with the U.S. dollar. 

The assets backing USDL include high-quality liquid assets such as U.S. dollar deposits, short-duration U.S. treasuries, and cash equivalents.

Regulatory Compliance and Safety Measures

Regulated by the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM), USDL ensures the security and transparency of its operations. Cascarilla emphasized that Paxos International operates as a “ring-fenced entity” dedicated solely to issuing the stablecoin. 

This structure ensures that in the event of any issues with Paxos, the assets backing USDL will be promptly returned to investors, safeguarding against potential bankruptcy risks.

Initial Market and Yield Distribution

Argentina is the first country to experience the benefits of USDL, with distribution facilitated through local crypto platforms Ripio, Buenbit, and TiendaCrypto. Users in Argentina can now earn daily yields on their USDL holdings through a technique known as rebasing, which increases their token balance automatically.

Ronak Daya, head of product at Paxos, explained that Paxos International will charge a 20 basis points distribution fee and a 30 basis points issuer fee, with the remaining yield distributed to users. Notably, during the initial promotion period, the issuer fee will be waived to encourage adoption and user engagement.

Limited Availability for the Paxos Stablecoin

Currently, USDL is not available to residents in several jurisdictions, including the U.S., UAE (except ADGM), the U.K., the European Union, Canada, Hong Kong, Japan, and Singapore. Cascarilla noted that the yield-bearing nature of USDL could be classified as a security by the U.S. Securities and Exchange Commission, which is why Paxos has not offered similar features on its existing stablecoin products like pax dollar (USDP).

Paxos International envisions a significant expansion of the stablecoin market. “Stablecoins inherently are about helping those people who are unbanked or underbanked, who don’t have access to dollars, for a number of different reasons,” Cascarilla explained.

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