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Home » Crypto Market News » USDG Stablecoin Launched by Major Finance Players to Boost Global Adoption

USDG Stablecoin Launched by Major Finance Players to Boost Global Adoption

  • November 5, 2024
  • 7

A new consortium formed by notable companies in both traditional finance and the cryptocurrency sector, including Robinhood, Galaxy Digital, Kraken, and Paxos, is backing a recently launched stablecoin called USDG, which is pegged to the United States dollar. This initiative aims to foster greater acceptance and utilization of stablecoins on a global scale.

Paxos, a blockchain infrastructure company, announced on November 5 the establishment of an “open network” intended to enhance competition within the regulated stablecoin market. The consortium believes that the existing market landscape has impeded the overall growth of the industry, and USDG seeks to change this with a more inclusive model that encourages participation from mainstream financial entities and facilitates the development of diverse stablecoin applications.

Currently, USDG is exclusively available on the Ethereum blockchain, but Paxos plans to expand its availability to other networks as regulatory frameworks continue to evolve. The stablecoin was launched from Singapore, with Paxos affirming its alignment with the Monetary Authority of Singapore’s soon-to-be-implemented stablecoin regulations.

The USDG stablecoin will be backed 1:1 by US dollars held in reserves managed by DBS Bank, Singapore’s largest financial institution. This backing includes dollar deposits, short-duration US government securities, and other cash equivalents, ensuring that users can exchange their tokens for fiat currency whenever needed. Additionally, only qualified entities such as custodians, exchanges, and fintech firms will gain access to join the newly established Global Dollar Network.

As USDG enters a competitive market currently dominated by Tether and USD Coin, which hold significant shares of the stablecoin supply, its success will depend on its ability to attract mainstream users and facilitate broader adoption across various platforms.

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