Stablecoin issuer Paxos’ entity Paxos International, based in the United Arab Emirates, has launched a yield-bearing stablecoin called “Lift dollar” (USDL) and has chosen Argentina as its first market.
Paxos International announced on Wednesday (5th) 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 treasuries, 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, stated in an interview with The Block that with USDL, users can earn a “truly risk-free” return. He emphasized that Paxos International is a “walled entity” and besides issuing the stablecoin, does not engage in any other activities. Cascarilla added, “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 Manager at Paxos, mentioned that users can currently earn around 5% yield on USDL, close to the current Effective Federal Funds Rate (EFFR). Paxos International utilizes Rebasing technology to distribute the yield, with users’ USDL holdings increasing daily with the earnings. Additionally, Daya noted that Paxos International will charge a 0.2% distribution fee and a 0.3% issuance fee, with the remaining earnings paid out 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, initially launching USDL stablecoin in Argentina.
Cascarilla mentioned that the US Securities and Exchange Commission (SEC) may classify yield-bearing stablecoins as securities, which is why Paxos does not offer yield on its existing stablecoin products like USDP.
Cascarilla emphasized that stablecoins are essentially meant to assist those who do not have bank accounts, lack banking services, or are unable to access US dollars for various reasons, and USDL will target such individuals globally in future releases. Daya added:
