Stablecoin issuer Paxos’s entity, Paxos International, based in the United Arab Emirates, has launched a yield-generating stablecoin called “Lift dollar” (USDL) and has chosen Argentina as its first market.
Paxos International stated on Wednesday (5th) that 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, 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 “truly risk-free” returns. He mentioned that Paxos International is a “walled entity” and, apart from issuing the stablecoin, does not engage in any other activities. 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, the product lead at Paxos, mentioned in an interview that users can currently earn around 5% on USDL, which is close to the current Effective Federal Funds Rate (EFFR). Paxos International uses Rebasing technology to distribute earnings, with Daya explaining that users’ USDL holdings will increase daily along with the earnings. Additionally, Daya 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 to residents in the United States and several jurisdictions. Paxos International is partnering with crypto platforms Ripio, Buenbit, and TiendaCrypto as distribution partners, launching USDL stablecoin first in Argentina.
Cascarilla mentioned that USDL is not available to residents in certain jurisdictions, including the United States, the UAE (excluding ADGM), the UK, the EU, Canada, Hong Kong, Japan, and Singapore. He also noted that the Securities and Exchange Commission (SEC) in the US may consider yield-generating stablecoins as securities, which is why Paxos’s main entity does not offer yields on its existing stablecoin products like USDP.
Cascarilla stated that stablecoins are essentially meant to assist those who do not have bank accounts, lack banking services, or cannot access the US dollar for various reasons, and highlighted that USDL will target such global populations in future releases. Daya added: