While Tether’s USDT remains the undisputed leader in the stablecoin market, competition is heating up as more contenders sharpen their teeth. And for good reason – the market is particularly juicy and expanding globally, with use cases multiplying for both professionals and individuals. To oversee all this, regulators are demanding, and the Monetary Authority of Singapore (MAS) is particularly strict on certain principles that Paxos had to comply with to issue its brand new stablecoin called USDG.
A New Player in the Competitive Stablecoin Market: US Dollar Global or USDG
Before considering any stablecoin in the country, Paxos first created a regulated entity: Paxos Digital Singapore Pte. Ltd. Then, it had to meet the requirements regarding the counterparties that guarantee the stability of this new stablecoin, such as holding high-quality liquid assets, namely US dollars, short-term US Treasury bills and other similar assets. Finally, the local Paxos entity partnered with a major Singaporean bank, DBS, to manage the treasury and custody of USDG reserves.
Paxos management welcomed the launch of this new in-house stablecoin, which will initially be available on Ethereum before expanding to other systems “in the short term,” according to the press release. The Product Director at Paxos then described the advantages of its product compared to the competition:
Business interest in stablecoins has never been higher, but the market lacks a solution that combines regulatory compliance with real economic incentives for businesses. USDG offers a trusted solution with a premier banking partner that will be the catalyst to drive stablecoin innovation and enterprise adoption globally.
Ronak Daya, Product Director at Paxos
The Greenback Still Favored by Stablecoin Issuers Worldwide
By imposing both clear and strict rules, MAS intends to support innovation and economic growth in the sector, and this is exactly what the Deputy Director of the institution reminded:
MAS’ regulatory framework for stablecoins aims to facilitate their use as both a credible digital medium of exchange and a bridge between fiat money and digital asset ecosystems.
Ho Hern, Deputy Managing Director of MAS
USDG will be the sixth stablecoin launched by crypto giant Paxos, after PayPal USD (PYUSD), Pax Dollar (USDP), and Pax Gold (PAXG) issued by Paxos Trust Company, LLC in New York and regulated in the United States, and Lift Dollar (USDL) issued and regulated in Abu Dhabi. As for the BUSD, it is no longer relevant after a legal saga with the SEC.
Stablecoins Gaining Impressive Traction Globally
The success of stablecoins worldwide is impressive and they are increasingly becoming the gateway to cryptocurrency by offering liquidity and ease of use while protecting against volatility. Entire areas of the world are shifting towards a stablecoin economy, and South America is often cited as an example to illustrate the phenomenon.
Key Points:
- Paxos launches USDG, a new stablecoin compliant with Singapore’s strict regulations
- USDG backed by high quality liquid assets and managed in partnership with DBS Bank
- Stablecoins gaining global traction as gateway to crypto, offering stability and liquidity
- Clear regulatory frameworks aim to support stablecoin innovation and economic growth
With USDG, Paxos is taking a strategic step to establish itself in the booming Asian crypto market while respecting the demanding framework put in place by the Singapore regulator. By combining regulatory compliance and a solid banking partnership, the USDG aims to become a benchmark for businesses and a catalyst for the massive adoption of stablecoins. An ambitious bet in a market where giants like Tether and Circle are already well established, but where opportunities for growth remain immense.
