Author: Nancy, PANews
Since BUSD encountered regulatory stranglehold and faded out of the center of the stablecoin stage last year, the issuer Paxos has had to adjust its strategy and strengthen compliance. Recently, Paxos announced the issuance of Singapore's compliant stablecoin network Global Dollar Network (USDG), which has been joined by many crypto giants, and will promote the widespread use of the stablecoin through the distribution of reserve income.
A compliant stablecoin approved by the Singapore Regulatory Authority , introducing a reserve income distribution mechanism
After receiving formal approval from the Monetary Authority of Singapore (MAS), Paxos announced the launch of the compliant USD stablecoin USDG earlier this month. Currently, the stablecoin runs on the Ethereum blockchain and will be expanded to other public chains in the future based on regulatory developments.
USDG is backed by 1:1 US dollar reserves, which include US dollar deposits, short-term US government bonds and other cash equivalents. DBS Bank, Singapore's largest bank by assets, is the main banking partner of USDG and is responsible for the management of its US dollar reserves.
Paxos plans to release the first attestation report for USDG in November. The attestation report is to be issued by Enrome LLP, an independent third-party accounting firm. The review will be conducted in accordance with the standards set by the Institute of Chartered Accountants of Singapore. In order to build community trust and ensure that financial data is fully transparent and reliable, Paxos promises to release attestation reports every month in the future.
Amid the fierce competition among multiple compliant stablecoins, USDG has also introduced an innovative profit distribution mechanism to increase its competitiveness. "Stablecoins are reshaping the financial system and completely changing the way people interact with the US dollar and payment methods. However, the current mainstream stablecoins are not regulated and fully retain the returns of reserve assets. USDG is actually a community token that returns almost all of the returns to participants and anyone can join. The network aims to incentivize the use of stablecoins worldwide and accelerate the socialization of this technology." said Charles Cascarilla, co-founder and CEO of Paxos.
Unlike mainstream stablecoins such as Tether (USDT) and Circle (USDC), USDG allows its partners to earn up to 100% of the returns from the assets supporting USDG on the platform. USDG will be rewarded based on the different ways of participation of partners and the liquidity created in the network. Custodians, exchanges, payment technology companies and other institutions in the financial sector can join through official invitations.
Currently, USDG’s announced partners include Anchorage Digital, Bullish, Galaxy Digital, Kraken, Nuvei, Paxos and Robinhood.
Strengthen compliance construction and promote the expansion of stablecoin territory
Paxos is an important participant in the stablecoin market. It has successively obtained regulatory licenses from the New York Department of Financial Services (NYDFS), the Monetary Authority of Singapore (MAS) and the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market in the United States. The assets it has issued include USDP, PAXG, BUSD, PYUSD, USDL and USDG.
Among them, BUSD, which once occupied an important position in the market, was severely damaged after being investigated by several US regulatory agencies in 2023. Although the US SEC announced in July this year that it would abandon its investigation into Paxos and determined that BUSD was no longer a security, the market share of this stablecoin has been swallowed up by other competitors and has also brought a considerable impact on Paxos' reputation and business.
In the face of this challenge, Paxos has also actively explored more cooperation opportunities and business models this year. For example, in January this year, the stablecoin USDP was officially launched on the Solana network; in June, Paxos launched a yield-based stablecoin Lift Dollar (USDL) denominated in US dollars, which is regulated by the United Arab Emirates (UAE); in October, Paxos announced the launch of a stablecoin payment platform to provide stablecoin payment and withdrawal services for payment providers and merchants; in the same month, Paxos announced that it would integrate with the Stellar network and planned to introduce assets to the Stellar network by the end of 2024.
In June this year, Paxos made strategic layoffs in order to focus more on its core businesses such as tokenization and stablecoins. Despite this, Paxos still emphasizes that its financial situation is sound, with more than $500 million in funds on its balance sheet.
In addition, Paxos has also introduced talents with regulatory backgrounds to further strengthen its compliance system. For example, in May this year, the "crypto godfather" and former US CFTC Chairman J. Christopher Giancarlo joined the Paxos board of directors to provide guidance and advice to the issuer.
"Blockchain and stablecoins are reshaping the financial system, making it symbiotic with the Internet. Stablecoins or digital dollars (dollars digitized through blockchain technology) are a key upgrade to the payment system that will revolutionize currency flows, allow more people to participate in the global economy, and ensure the dollar's dominance in the coming years." Not long ago, Charles Cascarilla once again emphasized in an open letter to major US presidential candidates that stablecoins will have a significant impact on the future of the US dollar.
