The UAE-based subsidiary of stablecoin issuer Paxos has introduced a new yield-bearing stablecoin named Lift Dollar (USDL), with Argentina being its initial market.
The stablecoin is designed to pay daily yields programmatically to token holders, backed one-to-one by U.S. dollars and high-quality liquid assets.
“USDL is issued permissionlessly on Ethereum and pays yield programmatically on a daily basis to token holders, subject to the reserve assets fully backing the total value of USDL in circulation,” Paxos International stated.
The assets backing USDL include U.S. dollar deposits, short-duration U.S. Treasuries, and cash equivalents. The stablecoin is regulated by the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM).
Paxos International is launching USDL in Argentina through partnerships with crypto platforms Ripio, Buenbit, and TiendaCrypto. Users can currently earn about 5% yield on USDL, which is comparable to the current local interest rate. Ronak Daya, head of product at Paxos, explained that the yield is distributed using a rebasing technique, resulting in daily increases in users’ USDL holdings.
Paxos International will charge a 20 basis points distribution fee and a 30 basis points issuer fee, with the issuer fee being waived during the initial promotion period of USDL.
USDL is not available to residents of certain jurisdictions, including the U.S., the UAE (except ADGM), the U.K., the European Union, Canada, Hong Kong, Japan, and Singapore. Cascarilla mentioned that a yield-bearing stablecoin could be viewed as a security by the U.S. Securities and Exchange Commission, which is why Paxos does not offer yield on its existing stablecoin products such as Pax Dollar (USDP).
“Stablecoins inherently are about helping those people who are unbanked or underbanked, who don’t have access to dollars for a number of different reasons,” Cascarilla said.
Paxos is known for issuing stablecoins such as PayPal USD, Pax Dollar (USDP), and Pax Gold. The company is regulated by the New York Department of Financial Services. Last year, Paxos faced regulatory scrutiny over its ties to Binance’s USD stablecoin, leading to the cessation of Binance USD issuance.
The full scope of the SEC’s investigation is unclear. But the US regulators have been questioning crypto firms over their practices around handling clients’ digital assets. The probe has gathered pace in the wake of the collapse of Sam Bankman-Fried’s crypto empire.
