The 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 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 treasury bonds, and cash equivalents, regulated by the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM).
Charles Cascarilla, a 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 a “truly risk-free” return. He emphasized that Paxos International is a “walled garden entity” and besides issuing the stablecoin, does not engage in any other activities. Cascarilla also noted that in case of any issues with Paxos, the assets backing USDL will not be part of bankruptcy proceedings but will be immediately returned to investors.
Ronak Daya, the product lead at Paxos, mentioned in an interview that users can currently earn around 5% return on USDL, close to the current effective federal funds rate (EFFR). Paxos International uses Rebasing technology to distribute earnings, with the user’s USDL holdings increasing daily with the earnings. Daya further stated that Paxos International will charge a 0.2% distribution fee and a 0.3% issuance fee, with the remaining earnings being 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 its distribution partners, launching USDL stablecoin first in Argentina.
Cascarilla clarified that USDL is not available for residents in certain jurisdictions, including the US, UAE (except for the Abu Dhabi Global Market), UK, EU, Canada, Hong Kong, Japan, and Singapore. He explained that the Securities and Exchange Commission (SEC) in the US may consider interest-bearing stablecoins as securities, which is why Paxos does not offer returns on its existing stablecoin products like USDP.
Cascarilla mentioned that stablecoins are essentially meant to help individuals without bank accounts, lacking banking services, or unable to access US dollars for various reasons, and USDL will be targeted towards this global audience in future releases. Daya added that:
