Paxos International, the global arm of New York-based Paxos, is set to issue a groundbreaking stablecoin called the Lift Dollar (USDL). This U.S. dollar-pegged stablecoin will be regulated by the Abu Dhabi Global Market (ADGM) and will not be available to users in the United States.

The USDL is designed to offer overnight yield on the interest Paxos International earns from the reserves backing it. These reserves, consisting of liquid U.S. government securities and cash equivalents, will be held in compliance with ADGM’s Financial Services Regulatory Authority requirements. Instead of earning interest on these reserves, Paxos International will levy an issuer fee for the token.

In addition to its regulation by the ADGM, Paxos announced that USDL will be accessible in Argentina through distributors such as Ripio, Buenbit, Manteca, and Plus Crypto.

An Ethereum smart contract will automatically distribute yield on the USDL via a mechanism called rebasing, which adjusts the supply based on market conditions. According to Bloomberg, the yield will be approximately 5%. Paxos International claims that USDL is the first regulated, interest-bearing stablecoin, although stablecoin holders can typically earn interest through methods like staking, restaking, and yield farming.

However, the USDL will not be available to residents of several regions, including the United States, the UAE outside of ADGM, the United Kingdom, the European Union, Canada, Hong Kong, Japan, and Singapore. Paxos International clarified:

"The digital assets referred to herein have not been and will not be registered under the US Securities Act of 1933, as amended, and may not be offered or sold in the US, except pursuant to an applicable exemption from registration."

Paxos, based in New York, also mints other digital assets such as PayPal USD (PYUSD), Pax Dollar (USDP), and Pax Gold (PAXG) under the supervision of the New York Department of Financial Services (NYDFS). The company had previously minted Binance USD (BUSD) until regulatory actions from the NYDFS and the U.S. Securities and Exchange Commission halted it for issuing an unregistered security.

The ADGM, established in 2013 as a free economic zone within Abu Dhabi, issued comprehensive distributed ledger technology (DLT) regulations in November and has been actively developing the sector. In February, it partnered with Solana to advance DLT technology. Prominent digital asset firms like Chainalysis, Blockdaemon, Rain, M2, Laser Digital, Binance FZE, and QCE Capital have set up offices or received licenses in the ADGM over the past year, reflecting its growing influence in the digital asset space.