Stablecoin issuer Paxos’s entity Paxos International, based in the United Arab Emirates, has launched a interest-bearing stablecoin called “Lift dollar” (USDL) and has chosen Argentina as its first market.
Paxos International stated on Wednesday (5th):
Paxos International said that USDL is pegged 1:1 to the US dollar and only holds “the highest quality liquid assets” such as US dollar deposits, short-term US Treasury securities, 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 a “truly risk-free” return. He mentioned that Paxos International is a “walled entity” and does nothing besides issuing the stablecoin. Cascarilla also noted, “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 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 Daya stating that users’ USDL holdings will increase daily with the earnings. Additionally, Daya mentioned 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 distribution partners, launching USDL stablecoin first in Argentina.
USDL is not available for residents in certain jurisdictions, including the US, UAE (excluding Abu Dhabi Global Market), 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’s main entity does not offer earnings on its existing stablecoin products like USDP.
Cascarilla mentioned that stablecoins are essentially meant to help those without bank accounts, lacking banking services, or unable to access US dollars for various reasons, and pointed out that USDL will target such individuals globally in future releases. Daya added:
