The creation of the Global Dollar Network by a number of well-known businesses from the cryptocurrency and traditional finance industries, including Paxos, Kraken, and Robinhood, is a major milestone for the financial landscape. The goal of this project is to increase stablecoin usage and adoption on a worldwide scale.
On November 5, blockchain infrastructure company Paxos announced the consortium’s foundation, emphasizing its goal to improve the stablecoin market. Arjun Sethi, co-CEO of Kraken, asserts that the current lack of competition in the regulated stablecoin space has hampered the industry’s potential. He claimed that by providing a more egalitarian paradigm that accepts mainstream participation and opens up new stablecoin applications, the launch of USDG, a new stablecoin based on the US dollar, will upend the current situation.
On November 1st, Paxos introduced the USDG stablecoin and specifically designed the Global Dollar Network to support it. USDG will initially only work on Ethereum, but Paxos plans to update it to other blockchains when restrictions change.
By issuing USDG from Singapore, Paxos asserts compliance with the Monetary Authority of Singapore’s upcoming stablecoin framework, established in August 2023. This new network will invite qualified organizations such as exchanges, custodians, and fintech firms to join its ecosystem.
Additionally, Paxos announced that DBS Bank, the largest bank in Singapore, will manage US dollars in reserves to back USDG one to one. This guarantees that users can quickly exchange their tokens for cash. Paxos’s head of product, Ronak Daya, emphasized that the partnership with DBS will facilitate the widespread adoption of stablecoins among various businesses.
Digital assets from Paxos include PayPal USD, Pax Dollar, and Pax Gold. However, Tether and Circle’s USD Coin, together controlling a significant portion of the stablecoin supply on Ethereum, have emerged as the dominant players in the market, coinciding with the launch of the USDG stablecoin. The Global Dollar Network seeks to alter this dynamic and give stablecoins a more resilient and competitive environment.
