Robinhood, Galaxy Digital, and Kraken will collaborate on a network to support Paxos’ newly launched stablecoin, USDG.
The consortium of crypto companies said the Global Dollar network is designed to accelerate worldwide stablecoin adoption. USDG is currently available only on the Ethereum blockchain, though Paxos said the stablecoin could be available on other blockchains soon.
“The collaboration between this list of partners is impressive,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “These firms are taking an approach that is more like Tether than Circle. They are launching USDG out of Singapore, because there is a greater serviceable addressable market outside of the U.S. right now.”
A Crowded Field
Paxos said USDG is compliant with the Monetary Authority of Singapore’s stablecoin framework, which was established last year. The stablecoin is backed one-to-one with the U.S. dollar in deposits, short-duration U.S. government securities, and other cash equivalents. The company’s USDG reserve will be held and managed at DBS Bank, Singapore’s largest financial institution.
The stablecoin is joining a crowded field dominated by Tether’s USDT and Circle’s USDC. Paxos also offers its Pax Dollar, and the company manages PayPal’s PYUSD stablecoin, which has quickly reached a $1 billion market cap.
A Golden Age
The multitude of use cases for stablecoins has fueled the surge in offerings, so much so that the digital assets could be on the cusp of a golden age. There are especially promising stablecoin use cases in cross-border payments and in countries with more volatile fiat currencies.
“Comparatively, the U.S. economy is doing well,” Hugentobler said. “There are relatively low rates of inflation, it is easy access to the dollar (world reserve currency), and there are dozens of ways to send payments and transact. That isn’t the case in many countries around the globe. This backs our thesis at Javelin that stablecoins will continue to grow and provide a great alternative to traditional fiat currencies, particularly in areas with economic uncertainty.”
He added: “However, Tether and Circle have dominated most of the world’s stablecoin market share, so there are plenty of challenges ahead for the Global Dollar network.”
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