Paxos Introduces USDL Automated Daily Yield Payments to Holders

Stablecoin issuer Paxos, through its entity Paxos International based in the United Arab Emirates, has launched an interest-bearing stablecoin called “Lift dollar” (USDL) and has chosen Argentina as its first market.

Paxos International stated on Wednesday (5th) that USDL is pegged 1:1 to the value of the US dollar and holds only “the highest quality liquid assets” such as US dollar deposits, short-term US treasuries, and cash equivalents, and is regulated by the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM).

Charles Cascarilla, board member of Paxos International and co-founder and CEO of Paxos, mentioned in an interview with The Block that with USDL, users can earn “truly risk-free” returns. He emphasized that Paxos International is a “ring-fenced entity” and, apart from issuing the stablecoin, does not engage in any other activities. Cascarilla also noted, “If anything were to happen to Paxos, these assets would not be part of the bankruptcy process; they would be immediately returned to investors.”

Ronak Daya, product lead at Paxos, stated in an interview that users can currently earn around 5% on USDL, close to the current Effective Federal Funds Rate (EFFR). Paxos International utilizes Rebasing technology to distribute returns, with Daya explaining that users’ USDL holdings will increase daily with the earnings. Additionally, Daya mentioned that Paxos International will charge a 0.2% distribution fee and a 0.3% issuance fee and will pay the remaining earnings to users.

USDL is not available for residents in the United States and several jurisdictions.

Paxos International is partnering with crypto platforms Ripio, Buenbit, and TiendaCrypto as distribution partners, launching USDL stablecoin first in Argentina.

USDL is not available for residents in certain jurisdictions, including the United States, the UAE (excluding ADGM), the UK, the EU, Canada, Hong Kong, Japan, and Singapore. Cascarilla stated that the Securities and Exchange Commission (SEC) in the US may view interest-bearing stablecoins as securities, which is why Paxos’ main entity does not offer returns on its existing stablecoin products like USDP.

Cascarilla mentioned that stablecoins are essentially designed to help those individuals who do not have bank accounts, lack banking services, or are unable to access US dollars for various reasons, and he pointed out that USDL will target this global audience in future releases. Daya added: