Paxos has introduced the Global Dollar (USDG), a US dollar-backed stablecoin that complies with Singapore's regulatory framework and is currently available on the Ethereum blockchain, with plans for expansion to other platforms.

DBS Bank, the largest bank in Southeast Asia, will serve as the primary banking partner for USDG, managing cash reserves and custody.

The launch of USDG is supported by a coalition of major companies, including Anchorage Digital, Bullish, Galaxy Digital, Kraken, Nuvei, and Robinhood.

Paxos CEO Charles Cascarilla emphasized that USDG is designed as a community token, distributing approximately 97% of its economic benefits to network participants, which aims to encourage widespread adoption.

Unlike many stablecoins, USDG features a yield-sharing model that allows companies contributing to its growth to earn rewards from the interest generated by its reserves.

Arjun Sethi, Co-CEO of Kraken, pointed out that USDG introduces much-needed competition in the regulated stablecoin market, fostering new use cases and broader participation.

The partnership with DBS Bank not only adds legitimacy to USDG but also leverages DBS's reputation for strong banking products and innovative solutions.

USDG enters a competitive landscape dominated by Tether (USDT) and USD Coin (USDC), which together account for nearly 90% of the stablecoin market capitalization.

Key regulatory requirements for USDG include maintaining value stability, holding low-risk, liquid assets in reserve, and ensuring timely redemption within five days.

As regulatory clarity increases, traditional financial institutions are more inclined to explore stablecoin offerings, suggesting that compliant providers like Paxos will have a competitive edge.

The launch of USDG reflects a broader expectation among crypto firms for increased acceptance of digital assets by U.S. regulators following the recent presidential election.

The introduction of USDG comes at a time when Tether, the leading stablecoin, is under federal investigation for potential regulatory violations, highlighting the need for compliant alternatives.