Paxos International to issue regulated interest-paying stablecoin

Paxos International is issuing an interest-bearing stablecoin called the Lift Dollar (USDL). The USDL will be regulated in the Abu Dhabi Global Market (ADGM) and pay overnight yield on the interest Paxos International earns on the reserves backing it.

The USDL will be backed 1:1 by liquid U.S. government securities and cash equivalent reserve assets held in accordance with the requirements of the ADGM’s Financial Services Regulatory Authority. Rather than earning interest on those reserves, Paxos International will charge an issuer fee for the token.

Paxos announced separately that the USDL will be available in Argentina through distributors Ripio, Buenbit, Manteca and Plus Crypto.

Paxos claims USDL is first of its kind

An Ethereum smart contract will use a mechanism called rebasing to distribute yield on the USDL automatically based on market conditions. According to Bloomberg, the yield will amount to about 5%. Paxos International said in a statement that the USDL is the first interest-bearing, regulated stablecoin. In general, stablecoin holders can also earn interest through staking, restaking and yield farming.

Related: UAE central bank approves licensing system for stablecoins

USDL will not be available to residents of the United States, the United Arab Emirates outside the ADGM, the United Kingdom, the European Union, Canada, Hong Kong, Japan or Singapore. Paxos International explained:

“The digital assets referred to herein have not been and will not be registered under the US Securities Act of 1933, as amended and may not be offered or sold in the US, except pursuant to an applicable exemption from registration.”

New York-based Paxos mints PayPal USD (PYUSD), Pax Dollar (USDP) and Pax Gold (PAXG) under regulation by the New York Department of Financial Services (NYDFS). It also minted the Binance USD (BUSD) until the NYDFS and United States Securities and Exchange Commission threatened action against it for issuing an unregistered security.

ADGM is growing rapidly

The ADGM is a free economic zone within Abu Dhabi set up in 2013. It issued comprehensive distributed ledge technology (DLT) regulations in November and partnered with Solana to develop DLT technology in February.

Since then, Chainalysis and Blockdaemon have set up offices there. Digital asset firms such as Rain, M2, Laser Digital, Binance FZE and QCE Capital have received licenses to offer their services in the ADGM in the past year.

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