Stablecoin issuer Paxos has launched an interest-bearing stablecoin called “Lift dollar” (USDL) through its entity Paxos International based in the United Arab Emirates, choosing Argentina as its first market.
Paxos International stated on Wednesday that USDL is pegged 1:1 to the US dollar and is backed by “the highest quality liquid assets” such as US dollar deposits, short-term US government securities, and cash equivalents, regulated by the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM).
Charles Cascarilla, board member and co-founder of Paxos International, told The Block in an interview that users can earn a “truly risk-free” return with USDL. He mentioned that Paxos International is a “walled-off entity” and if anything were to happen to Paxos, the assets would not be part of any bankruptcy proceedings and would be immediately returned to investors.
Product lead at Paxos, Ronak Daya, stated in an interview that users can currently earn around 5% yield on USDL, close to the current Effective Federal Funds Rate (EFFR). Paxos International uses Rebasing technology to distribute the earnings, with users’ USDL holdings increasing daily with the yield. Daya also mentioned that Paxos International will charge a 0.2% distribution fee and a 0.3% issuance fee, distributing the remaining earnings 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 distribution partners, launching USDL stablecoin first in Argentina.
USDL is not available for residents in certain jurisdictions, including the US, UAE (except for ADGM), UK, EU, Canada, Hong Kong, Japan, and Singapore. Cascarilla noted that the US Securities and Exchange Commission (SEC) may consider interest-bearing stablecoins as securities, which is why Paxos does not offer yield on its existing stablecoin products like USDP.
Cascarilla stated that stablecoins are essentially designed to help those without bank accounts, lacking banking services, or unable to access US dollars for various reasons, and mentioned that USDL will target this global audience in future releases. Daya added:
