” . Blockchain for Banking • News Paxos launches Global Dollar USDG in the EU 3 hours agoby Ledger Insights Paxos, the issuer of the Global Dollar stablecoin (USDG) has launched it in the EU in compliance with the local MiCA regulations. Some of the initial distributors in Europe include Kraken and Gate. The issuer shares most of the revenues it earns on the stablecoin’s reserves with distribution partners, a model that represents a departure from industry norms. “USDG is a fully regulated global USD-stablecoin that is compliant with MiCA and now available in the EU, a testament to our commitment to offering global digital assets that are supervised by prudential regulators and also meet the highest standards of consumer protection,” said Walter Hessert, Head of Strategy at Paxos. “We’re excited to partner with some of the leading players in Europe to bring this leading standard of compliance to more than 450 million consumers in the European Union.” On a global basis, USDG has several high profile distribution partners including Anchorage Digital, Fiserv, Kraken, Mastercard, Robinhood and Worldpay. But it’s still early days for the stablecoin, with a total issuance of $320 million. The digital currency was originally issued under Singapore laws, where Paxos is also regulated. Last year the company acquired Finland’s Membrane Finance with an existing MiCA license to operate across Europe, which has been re-named to Paxos Issuance Europe. Multi jurisdiction stablecoins: the EU controversy Today’s launch touches on a topical area – how same brand stablecoins are fungible across jurisdictions. The EU has particular requirements for stablecoin reserves, demanding that smaller stablecoins such as USDG hold 30% as cash in local bank accounts. This regulatory framework creates operational complexities for global stablecoin management. Despite holding separate backing assets for the EU issued electronic money tokens (EMTs) there is only one smart contract on each blockchain representing stablecoins issued globally. In practice this is managed by re-balancing reserves. The EU requires crypto exchanges to report to EMT issuers on a daily basis, so Paxos will know roughly how many stablecoins are issued in the EU, except for self hosted balances. Hence, it can ensure sufficient data to manage reserve rebalancing, and its white paper said it will rebalance on at least a weekly basis. At the current scale that makes sense, but as it grows it will probably be more regular. EU parliamentarians are not happy about this rebalancing process as they worry that in a crisis non EU residents will redeem via Europe because it’s cheaper and available direct from the issuer. When drafting MiCA they deliberately chose not to recognize third country stablecoin issuance and they believe this methodology is tantamount to doing so. Image Copyright: Background janeuk86 / 123rf, Composite Ledger Insights, Ledger Insights digital currency e-money electronic money EU Europe fungibility global dollar MiCA MiCAR Paxos stablecoin USDG FacebookXRedditEmailLinkedInWhatsApp . ”
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