Major Players in the Crypto Sector Establish Global Stablecoin Network
Leading companies in the cryptocurrency sector, Robinhood, Kraken, and Galaxy Digital, have joined forces to establish a global stablecoin network. A stable cryptocurrency pegged to the US dollar, USDG, was launched on Monday through the Global Dollar Network. The consortium aims to accelerate the adoption of stablecoins worldwide and fairly distribute economic benefits to its partners.
The stablecoin has been developed by Paxos and is backed by fiat currency-supported reserves. USDG aims for a wide range of use cases not only in banking and finance sectors but also in the cryptocurrency world. A collaboration with DBS, Singapore's largest bank, has been established for effective custody services, with reserve management entrusted to this bank.
USDG's launch through the Global Dollar Network USDG, supported by the US dollar, has been legally introduced in Singapore. The stable cryptocurrency, developed by Paxos Digital Singapore, is regulated by the Monetary Authority of Singapore and operates on the Ethereum blockchain. USDG complies with Singapore's stable cryptocurrency framework and plans to expand to other networks in the future.
The reserve assets of USDG consist of US dollar deposits, short-term US government bonds, and other cash equivalents. The management of these assets is provided by DBS, aiming to enhance reliability. This arrangement facilitates easy access to fiat currencies for the stable cryptocurrency.
Strategic move by Kraken, Galaxy Digital, and Robinhood Kraken's co-CEO, Arjun Sethi, highlighted that the lack of competition in the stablecoin sector limits the market's potential. He stated that these limitations would be overcome with USDG, leading to the emergence of new use cases. The consortium will work towards the global adoption of USDG and its integration with financial solutions.
Although the consortium is currently in the invitation-only phase, it plans to open its doors to a variety of different players in the sector. New members will be welcomed from a wide range of backgrounds, including custodians, exchanges, payment technology companies, traders, card networks, and banks. Participants will be able to earn economic rewards from USDG reserves based on their contributions to the expansion of the network.
Competition in the cryptocurrency market is intensifying USDG is Paxos' second stable cryptocurrency initiative, aiming to challenge market-leading stablecoins such as Tether and Circle. USDG intends to compete with these players, who excel in volume and market capitalization, through various strategic partnerships.
At the same time, Ripple plans to make a strong market entry with RLUSD, a stable cryptocurrency pegged to the dollar. Adding to this competitive environment, Stripe's acquisition of the stablecoin provider Bridge signals the entry of new players into the market.