In a groundbreaking collaboration, blockchain infrastructure leader Paxos and Singaporean banking giant DBS have unveiled a new stablecoin called Global Dollar (USDG). This strategic initiative follows Paxos’s recent achievement of securing approval as a Major Payments Institution (MPI) to offer digital payment token services.
Paxos USDG: A Stablecoin Aligned with Singapore’s Regulatory Standards
On November 1, Paxos shared the exciting news of the USDG stablecoin launch, which will be issued by its Singapore-based subsidiary under the oversight of the Monetary Authority of Singapore (MAS). Designed to attract regulated institutions, USDG is a dollar-pegged stablecoin developed with stringent standards of accountability and security.
Initially issued on Ethereum, USDG is set for expansion to other blockchain networks, aligning with the anticipated Singaporean Stablecoin Regulatory Framework introduced in August 2023. This framework mandates that stablecoins adhere to rigorous standards, including value stability, capital reserves, redemption timelines, and disclosure practices. To ensure security and credibility, these standards require holding low-risk, highly liquid assets, maintaining a base capital of $1 million, and facilitating redemptions within five days.
Strategic Insight from Paxos
Ronak Daya, Head of Product at Paxos, emphasized the transformative potential of USDG in reshaping market dynamics through enhanced institutional engagement. He noted that while enterprise interest in stablecoins is at an all-time high, the market lacks solutions that seamlessly combine regulatory compliance with tangible economic incentives for businesses.
USDG joins Paxos’s growing portfolio of operational stablecoins, which includes PayPal USD (PYUSD), Pax Dollar (USDP), and Pax Gold (PAXG). Notably, Paxos was also the issuer of Binance stablecoin BUSD before receiving a cease order from the New York Department of Financial Services (NYDFS).
DBS Bank: Guardian of USDG Reserves
As a key collaborator, DBS Bank, Singapore’s largest bank by assets, is set to play a crucial role in the USDG stablecoin initiative. DBS will act as the custodian for USDG reserves and serve as the primary banking partner managing cash operations.
This partnership underscores DBS’s expanding footprint in the digital finance landscape amidst the burgeoning global interest in cryptocurrency and blockchain technologies. Beyond USDG, DBS operates the DBS Digital Exchange, a prominent crypto-trading platform, and holds a significant partnership with the Sandbox metaverse project.
Conclusion
The introduction of the USDG stablecoin marks a pivotal moment in the convergence of traditional finance and blockchain technology. By aligning with Singapore’s forward-thinking regulatory framework, Paxos and DBS are setting a new standard for institutional engagement in the digital economy, paving the way for increased adoption of stablecoins as secure and reliable financial instruments.
