Paxos Launches Yield-Bearing Stablecoin Backed By Industry Heavyweights

Stablecoin issuer Paxos is launching a stablecoin which will distribute reserve income to network participants, according to a Nov. 4 announcement.

The Global Dollar, or USDG, is backed by institutional crypto bank Anchorage Digital, asset management firm Galaxy Digital, exchanges Kraken and Bullish, payments platform Nuvei, fintech Robinhood, and Paxos itself.

“The leading stablecoins are unregulated and retain all the reserve economics,” said Charles Cascarilla, CEO and co-founder of Paxos. “Global Dollar Network will return virtually all rewards to participants and is open for anyone to join. It is designed to incentivize global stablecoin usage and accelerate societal wide adoption of this technology.”

The firm also introduced the Global Dollar Network, an open network aimed at accelerating stablecoin usage worldwide. Paxos is inviting leaders from various sectors — including custodians, exchanges, payment fintechs, merchants, protocols, card networks, banks, and investment platforms — to join the initiative.

Singapore Compliance

DBS Bank, Southeast Asia's largest bank, will be the custodian, managing USDG’s reserves.

USDG is issued in Singapore and aims to meet the Monetary Authority of Singapore's (MAS) upcoming stablecoin regulations.

In July, Paxos Singapore received approval to issue stablecoins under the MAS framework. The MAS framework requires stablecoins to be backed by low-risk, highly liquid assets and mandates minimum capital of 1 million Singapore dollars (or around $750,000).

MAS Deputy Managing Director Ho Hern Shin noted the framework aims “to facilitate the use of stablecoins as a credible digital medium of exchange.”

The MAS has not yet announced further developments regarding the enforcement of the stablecoin framework, which still requires approval from Singapore’s parliament.

USDG differentiates itself from leading stablecoins, Tether’s USDT and Circle’s USDC, by distributing income from its U.S. Treasury reserves back to network participants.

Tether reported a $2.5 billion net profit for the third quarter of 2024, largely fueled by gains from the U.S. Treasuries and gold holdings. Tether disclosed it holds over $6 billion in excess reserves.

Additionally, Tether’s gold holdings yielded about $1.1 billion in unrealized gains. Beyond stablecoin operations, Tether has allocated $7.7 billion into renewable energy, Bitcoin mining, artificial intelligence, telecommunications, and education. The company’s investment arm also reported holding an additional 7,100 Bitcoin as of Sept.30.

USDG enters a stablecoin market dominated by Tether’s USDT, with a market cap of $120 billion, and Circle’s USDC at $35 billion. Paxos is betting that USDG’s compliance-first approach and shared income model will appeal to institutions looking for regulated stablecoin options.

Paxos's Stablecoin Portfolio

Paxos has a history of stablecoin issuance, including the once third-largest stablecoin, Binance USD (BUSD).

Paxos ceased issuing BUSD in February 2023 following an order from the New York Department of Financial Services (NYDFS), leading BUSD’s market cap to drop from its all-time highs of $23 billion in 2021 to $68 million today.

Paxos’s current stablecoins include Pax Dollar (USDP), Pax Gold (PAXG), and PayPal USD (PYUSD).

Among these, PAXG, backed by physical gold, holds a market cap of $541 million, while PYUSD, launched in partnership with PayPal, declined to $533 million from its August peak of $1.01 billion. Meanwhile, USDP has a market cap of $110 million.