A group of companies spanning traditional finance and the crypto sector, including Robinhood, Galaxy Digital, Kraken, and Paxos, have come together to support a new stablecoin pegged to the U.S. dollar. Other countries such as the United Kingdom have also previously gotten involved with stablecoin regulation. In a statement on November 5th, 2024, Paxos, a blockchain infrastructure provider, revealed that the newly established open network aims to boost the global adoption and usage of stablecoins. The network is intended to foster worldwide adoption of the new USDG stablecoin, which was launched on November 1st by Paxos. A Disruptive Initiative Kraken co-CEO Arjun Sethi commented that the absence of competition in the regulated stablecoin market has held back the industry and its potential. USDG disrupts this by offering a fairer model that will attract mainstream participants and spur new stablecoin use cases, he added. Initially available only on the Ethereum (ETH) blockchain, Paxos intends to expand USDG to other networks as regulatory landscapes evolve. Paxos will issue USDG out of Singapore, with the firm stating that it fully complies with the stablecoin regulatory framework provided by the Monetary Authority of Singapore. Eligible participants, including custodians, exchanges, and fintech companies, will be able to join the Global Dollar Network by invitation. Enabling Broader Adoption The backing of the stablecoin with the U.S dollar will be managed by DBS Bank, the largest financial institution in Singapore. USDG will be fully backed on a 1:1 basis with USD, held in deposits, short-term U.S. government securities, and other liquid assets, ensuring that tokens can be redeemed for fiat currency when needed. Ronak Daya, who serves as the Head of Product at Paxos, emphasized that the partnership with DBS will enable broader enterprise-level adoption of the stablecoin. In addition to USDG, Paxos offers other digital assets such as PayPal USD (PYUSD), Pax Dollar (USDP), and Pax Gold (PAXG). The launch of USDG and its Global Dollar Network will introduce competition in a market largely dominated by two main stablecoin issuers, namely USDT and USDC, which together account for 56% and 27% of the stablecoin supply on Ethereum, according to DefiLlama.
