Source: PR Newswire

Introduction

Stablecoins are digital assets tied to the value of a fiat currency, relying on the stability of traditional money and the flexibility of blockchain technology. Their connection to fiat currencies and national economies makes them highly regulated financial products which poses challenges, as widely used or popular stablecoins have faced restrictions due to non-compliance with economic and regional laws.

On December 30, 2024, USDT issued by Tether Limited was delisted from the European market for failing to meet MiCA (Markets in Crypto-Assets) regulations. Such restrictions not only affect retail users but also limit adoption by financial institutions, which cannot guarantee the protection of their customers when working with non-compliant stablecoins.

The Global Dollar (USDG), issued by Paxos Dollar Singapore Ltd, aims to address regulatory concerns while expanding stablecoins’ utility and enterprise adoption.

What is the Global Dollar (USDG)?

The Global Dollar under the ticker USDG is a stablecoin pegged to the United States Dollar, issued by Paxos Dollar Singapore Ltd, under the regulatory oversight of the Monetary Authority of Singapore (MAS).

The USDG is backed by the Global Dollar Network, a group of financial tech firms, including Paxos, Robinhood, Kraken, Nuvei, Bullish, Anchorage Digital, and Galaxy Digital.

The Global Dollar Network aims to facilitate stablecoin adoption and promote real-world use cases. They plan to reward companies that help build network connectivity and liquidity, distributing approximately 97% of their revenue to network participants.

Source: Global Dollar

Launched on November 1, 2024, USDG is currently available to enterprises through an invite-only window for select custodians, exchanges, payment processors, merchants, and banks to develop new solutions using the stablecoin. Interested ventures can also apply for an invite via the Global Dollar website. For retail investors, USDG is available on a few centralized exchanges as of the time of writing.

About Paxos

Paxos is a regulated financial institution that offers blockchain infrastructure and tokenization services. It provides a platform for companies to issue and manage digital assets while complying with strict regulatory frameworks.

Paxos is licensed to engage in virtual currency business activities by the New York Department of Financial Services (NYDFS). It is the issuer of several regulated digital assets, including PayPal USD (PYUSD), Pax Dollar (USDP), and Pax Gold (PAXG).

Paxos International, an affiliate of Paxos, issues the yield-bearing stablecoin Lift Dollar (USDL). Paxos Digital Singapore is responsible for the Global Dollar (USDG), a USD-backed stablecoin that is compliant with the Monetary Authority of Singapore’s upcoming stablecoin regulatory framework.

Additionally, Paxos is a well-funded fintech company, raising over $540 million from prominent investors such as Oak HC/FT, Declaration Partners, Founders Fund, Mithril Capital, and PayPal Ventures.

The Main Features of Global Dollar (USDG)

Regulatory Compliance

Paxos Digital Singapore, the issuer of USDG, operates under the MAS’s Major Payment Institution (MPI) license. This license allows Paxos to adhere to Singapore’s strict financial standards, align with international norms, and provide USDG holders with additional security and reliability.

Stability

USDG is a stablecoin fully backed by US dollar deposits, short-term US government securities, and other high-quality liquid assets, ensuring that each USDG token maintains a 1:1 value with the US dollar.

Transparency

Paxos publishes monthly reserve reports, allowing users to independently verify the stability of its stablecoin. This commitment to transparency ensures that users can confirm their assets are fully backed by secure financial reserves.

How Does USDG Work?

The Global Dollar is a fiat-backed stablecoin, on a 1:1 peg, meaning for every 1 USDG minted, 1 USD is held in its bank reserve. DBS Bank, one of the largest banks in Southeast Asia, serves as Paxos’ primary banking partner for cash management and custody of USDG reserves.

Paxos maintains a reserve of high-quality liquid assets, including US dollar deposits, short-term US government securities, and other cash equivalents. This allows consumers to redeem their tokens for fiat currency at any given time.

Furthermore, USDG is an ERC-20 token currently supported on the Ethereum Chain. Upon obtaining regulatory permission, USDG will be expanded to other chains. The smart contract can be viewed via Etherscan and GitHub.

Transparency: USDG Reserve Report

Paxos publishes monthly reserve reports where users can directly verify the stability of the stablecoin.

Source: Paxos

The USDG reserve reports are issued by Enrome LLP, an independent third-party accounting firm. This audit is conducted in accordance with standards established by the Institute of Singapore Chartered Accountants (ISCA).

Here’s the statement of USDG Reserves as of December 2024:

Source: Paxos

Key Differences Between USDG, USDT and USDC

A comparison of USDG with the two leading stablecoins; USDT and USDC.

Is USDG a Good Investment?

While stablecoins are not considered investments, USDG can be used as a store of value, as the issuer (Paxos Dollar Singapore) guarantees that highly liquid assets are held in bank reserves. Potential investors must also factor in the economic policies of the American government which could affect the price of the Dollar ($).

Investing in USDG like any other cryptocurrency, carries certain risks, including the volatility of the cryptocurrency market and potential regulatory changes. Investors should always research and assess their risk tolerance before investing in cryptocurrency.

News on USDG

Source: Paxos

Paxos Partners with Standard Chartered for Reserve Management

Paxos is collaborating with Standard Chartered, a leading multinational Bank, to provide cash management, trading, and custody services, further strengthening the infrastructure supporting the stability of USDG.

Conclusion

Global Dollar (USDG) addresses the limitations of existing stablecoins, positioning itself as a fully regulated digital asset. The stablecoin is issued by Paxos, a reputable company with a strong track record in the cryptocurrency market. It is also supported by leading financial organizations in the crypto space and focuses on rewarding participating institutions that contribute to its liquidity and adoption.