Stablecoin issuer Paxos’s 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):
USDL is pegged 1:1 to the US dollar and is backed by “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 users can earn a “truly risk-free” return with USDL. He mentioned that Paxos International is a “walled entity” and if anything were to happen to Paxos, the assets would not be part of the bankruptcy process and would be immediately returned to investors.
Ronak Daya, product lead at Paxos, mentioned in an interview that users can currently earn around 5% on USDL, close to the current Effective Federal Funds Rate (EFFR). Paxos International uses Rebasing technology to distribute returns, and Daya stated 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 for residents in the US and several jurisdictions. Paxos International is partnering with crypto platforms Ripio, Buenbit, and TiendaCrypto as its distribution partners, launching USDL stablecoin first in Argentina.
Cascarilla noted that the US Securities and Exchange Commission (SEC) may consider interest-bearing stablecoins as securities, which is why Paxos does not offer returns on its existing stablecoin products like USDP. He stated that stablecoins are essentially meant to help individuals without bank accounts, lacking banking services, or unable to access USD for various reasons, and USDL will target these populations globally in future releases.
