Stablecoin issuer Paxos’ 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):
Paxos International stated that USDL is pegged 1:1 with the US dollar and holds only “the highest quality liquid assets,” such as USD deposits, short-term US treasuries, and cash equivalents, and is regulated by the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM).
Charles Cascarilla, board member of Paxos International and co-founder and CEO of Paxos, stated in an interview with The Block that with USDL, users can earn “truly risk-free” returns. He mentioned that Paxos International is a “walled-garden entity” and besides issuing the stablecoin, does not engage in any other activities. Cascarilla also pointed out, “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, mentioned in an interview that users can currently earn around 5% returns on USDL, close to the current Effective Federal Funds Rate (EFFR). Paxos International utilizes Rebasing technology to distribute returns, with Daya stating that users’ USDL holdings will increase daily with the returns. Additionally, Daya mentioned that Paxos International will charge a 0.2% distribution fee and a 0.3% issuance fee, with the remaining returns being paid to users.
USDL is not available to residents in the United States and several jurisdictions.
Paxos International is partnering with crypto platforms Ripio, Buenbit, and TiendaCrypto as its distribution partners, launching USDL stablecoin first in Argentina.
USDL is not available to residents in certain jurisdictions, including the United States, UAE (excluding ADGM), UK, EU, Canada, Hong Kong, Japan, and Singapore. Cascarilla stated that the Securities and Exchange Commission (SEC) in the US may consider interest-bearing stablecoins as securities, which is why Paxos, the main entity, does not offer returns on its existing stablecoin products (such as USDP).
Cascarilla mentioned that stablecoins are essentially designed to help individuals who do not have bank accounts, lack banking services, or cannot access USD for various reasons, and noted that USDL will target such demographics globally in future releases. Daya added:
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