A consortium of traditional finance and crypto companies, including Robinhood, Galaxy Digital, Kraken, and Paxos, has come together to support a new stablecoin pegged to the U.S. dollar.
In a Nov. 5 statement, blockchain infrastructure company Paxos announced that this “open network” is designed to drive global adoption of stablecoins.
“The lack of competition in the regulated stablecoin market has prevented the industry from reaching its full potential. USDG upends this dynamic with a more equitable model that will bring mainstream participants into the ecosystem and accelerate new stablecoin use cases,” stated Kraken co-CEO Arjun Sethi.
The network’s aim is to support Paxos’ USDG stablecoin, which the firm launched on Nov. 1 and is currently available on the Ethereum blockchain. Paxos indicated that USDG will eventually be available on other blockchains as regulatory landscapes evolve.
Paxos will issue USDG out of Singapore, which the company says meets compliance standards with the Monetary Authority of Singapore’s upcoming stablecoin framework. Qualified entities such as custodians, exchanges, and fintech firms can join the Global Dollar Network by invitation.
The USDG stablecoin will be fully backed by U.S. dollar reserves held by DBS Bank, Singapore’s largest bank. USDG is pegged 1:1 to the U.S. dollar, backed by dollar deposits, short-term U.S. government securities, and cash equivalents to ensure it can be redeemed for fiat currency.
Paxos head of product, Ronak Daya, highlighted that the partnership with DBS will support “enterprise-level stablecoin adoption.”
USDG and the Global Dollar Network enter a stablecoin market currently dominated by two major issuers: Tether (USDT), with 56% market share, and Circle’s USD Coin (USDC), which holds 27%, according to DefiLlama.
