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In recent months, both Tether and Paxos have taken steps to expand the stablecoin ecosystem by introducing new regionally backed digital assets pegged to fiat currencies. Tether announced the launch of a UAE dirham-pegged stablecoin on The Open Network (TON) blockchain, supported by partnerships with local entities Phoenix Group and Green Acorn Investments. Meanwhile, Paxos, in collaboration with Robinhood, Galaxy Digital, and Kraken, launched a US dollar-backed stablecoin, USDG, aiming to increase stablecoin use cases and accessibility.
Traditional Finance Giants and Crypto Titans Form Consortium to Launch New USD-Backed Stablecoin 'USDG'
Leading traditional finance and cryptocurrency firms—including Robinhood, Galaxy Digital, Kraken, and Paxos—have joined forces to form a consortium backing the new stablecoin USDG, pegged to the US dollar.
Paxos, the blockchain infrastructure firm spearheading this initiative, said that the USDG stablecoin was designed to fill gaps in the regulated stablecoin market, particularly by fostering a more competitive and equitable ecosystem. Paxos aims to revolutionize the stablecoin landscape, which has been dominated by a limited number of major issuers and hindered by regulatory complexities. The company shared that USDG will initially be available on the Ethereum blockchain, with plans to expand to other blockchains as regulatory environments evolve globally.
“The lack of competition in the regulated stablecoin market has prevented the industry from reaching its full potential,” said Arjun Sethi, co-CEO of Kraken, one of the consortium’s founding members. “USDG upends this dynamic with a more equitable model that will bring mainstream participants into the ecosystem and accelerate new stablecoin use cases.”
This emphasis on expanding stablecoin use cases and participation aligns with Paxos’ broader vision to build an “open network” through the Global Dollar Network. This framework will invite qualified entities such as custodians, exchanges, and fintech firms, allowing them to integrate and support USDG, fostering stablecoin adoption across various sectors.
One of the most noteworthy aspects of this consortium is its approach to regulatory compliance. Paxos will issue USDG from Singapore, a strategic decision given the country’s progressive regulatory stance on digital assets. Notably, the Monetary Authority of Singapore (MAS) established a new stablecoin framework in August 2023, and Paxos states that USDG complies substantively with MAS guidelines.
To ensure a stable foundation for USDG, Paxos has partnered with DBS Bank, Singapore’s largest financial institution, which will manage USDG’s 1:1 US dollar backing. The stablecoin’s reserves consist of dollar deposits, short-term US government securities, and cash equivalents, thereby ensuring redeemability for fiat. This robust backing offers users confidence that USDG maintains true-to-value parity with the US dollar.
The stablecoin market is largely controlled by two major issuers, Tether (USDT) and Circle’s USD Coin (USDC), with 56% and 27% of the stablecoin supply on Ethereum, respectively, according to data from DefiLlama. However, the entry of USDG, with backing from a consortium of influential financial and crypto entities, is poised to introduce much-needed diversity and competition.
USDG is not Paxos’ first foray into the stablecoin market. The company has previously launched PayPal USD (PYUSD), Pax Dollar (USDP), and Pax Gold (PAXG), establishing itself as a leader in regulated digital assets.
Consortium Members Bring Expertise and Reach
The partnership with key industry players like Robinhood, Galaxy Digital, and Kraken, each bringing their unique expertise and networks, sets USDG apart from previous stablecoin projects. Robinhood, with its vast user base and recent ventures into cryptocurrency trading, will provide access to retail investors. Galaxy Digital, a crypto investment firm, and Kraken, a global crypto exchange, will add depth to the stablecoin’s integration into both retail and institutional spaces.
By fostering an ecosystem that spans various segments of the financial and crypto markets, the consortium aims to drive stablecoin adoption beyond conventional boundaries. This initiative seeks to introduce USDG as a viable alternative to fiat currency, furthering its integration into mainstream financial systems while potentially introducing new stablecoin use cases in decentralized finance (DeFi) and cross-border transactions.
With the emergence of USDG, Paxos and its consortium partners are setting the stage for the stablecoin to become a key player in the digital finance landscape. Stablecoins have increasingly gained traction as reliable stores of value and transactional currencies, providing a bridge between traditional finance and decentralized ecosystems. USDG’s compliance with regulatory frameworks, coupled with its 1:1 backing by reputable banking institutions, positions it as a trustworthy alternative within the stablecoin sector.
The Global Dollar Network and the issuance of USDG could also spark a broader movement toward regulatory clarity for stablecoins, a space that has seen ongoing debates and divergent approaches worldwide. By basing operations in Singapore, Paxos sets an example of compliance and collaboration with progressive regulators, paving the way for similar initiatives in other jurisdictions.
Tether Launches Dirham-Pegged Stablecoin on TON Blockchain, Paving the Way for UAE’s Digital Finance Revolution
Meanwhile, Tether, the world’s largest stablecoin issuer, has announced the launch of its dirham-pegged stablecoin on The Open Network (TON) blockchain, marking a major step forward for digital finance in the United Arab Emirates. The news was shared by Tether's senior strategic partnership manager, Alessandro Giori, at the TON Gateway event in Dubai, further establishing TON’s foothold as a rapidly growing blockchain platform.
Tether’s collaboration with UAE-based entities Phoenix Group and Green Acorn Investments is part of its ambitious plan to create a stable, liquid digital representation of the UAE dirham (AED). This project, announced on Aug. 21, aims to bring the stability and trust associated with the dirham to the blockchain space. By pegging its new token to the AED, Tether is enabling businesses and consumers in the UAE to transact with a stablecoin fully backed by liquid UAE-based reserves, establishing a secure and reliable digital currency framework.
This move aligns with the UAE’s progressive approach to digital assets and blockchain technology, as it paves the way for a more integrated digital finance landscape within the region.
The decision to launch the dirham-backed stablecoin on TON is a natural progression of Tether’s existing relationship with the blockchain. Earlier this year, in April, Tether’s USD-pegged stablecoin, USDT, was introduced to the TON blockchain at the Token2049 event in Hong Kong. Since then, USDT on TON has achieved rapid success, becoming the fastest blockchain-based USDT implementation to reach a remarkable milestone of 1 billion tokens in circulation.
At the TON Gateway event, Giori praised TON’s ecosystem, noting that the network supports around 160,000 daily USDT transactions with over 7.6 million wallets. TON has also seen widespread adoption, with over 100 crypto platforms integrating USDT on the TON blockchain.
Fireblocks, a digital asset platform widely used by institutions, has also integrated USDT on TON, a development Giori highlighted during the event. This integration introduces USDT on TON to a broader array of institutional players, further fueling TON’s user growth and providing an ecosystem where Tether’s dirham-pegged stablecoin can thrive.
The UAE’s regulatory landscape has been evolving rapidly to accommodate stablecoins, enhancing the credibility and security of dirham-backed tokens. On June 3, UAE authorities approved a framework for issuing, licensing, and supervising stablecoins, marking a significant step toward regulated digital currency in the country. This licensing framework not only provides clarity for stablecoin issuers but also opens the door for innovative financial solutions like Tether’s AED stablecoin, aligning with the UAE’s vision of a robust digital economy.
The new licensing system builds on the UAE’s commitment to becoming a global blockchain and fintech hub. In October, another dirham-backed stablecoin project, AED Stablecoin, received initial approval from the UAE’s central bank. If granted full approval, this project would make AED Stablecoin one of the first fully regulated dirham-backed stablecoins in the UAE.
Tether’s Strategic Vision: From USDT to UAE Dirham Stablecoin
Besides USDT, Tether already offers other digital asset-backed tokens, such as the Pax Dollar (USDP) and Pax Gold (PAXG). With the introduction of the dirham-backed stablecoin, Tether is once again demonstrating its strategy to support the growth of stablecoins tailored to specific economies, helping bridge traditional financial systems with the digital asset ecosystem.
Moreover, Tether’s choice to launch the dirham-backed stablecoin in partnership with TON signals the importance of fast, efficient, and scalable blockchain platforms in realizing its vision. TON’s ability to reach 1 billion USDT tokens in circulation within just six months on the platform has made it an attractive network for Tether’s expansion efforts.