KEY POINTS
- Paxos, one of GDN's initial partners, will issue the new stablecoin
- Kraken said it is 'proud' to be part of the movement toward 'raising the bar on trust'
- The $USDG's entry comes as Tether's status is in question amid a reported federal probe
Some of the cryptocurrency industry's powerhouse firms have joined hands to launch the Global Dollar Network, an "open network designed to accelerate and reward global stablecoin adoption," marking a significant milestone in the burgeoning stablecoin segment.
The Global Dollar Network (GDN) looks to "revolutionize" the existing stablecoin ecosystem through the Global Dollar (USDG), a "fully backed and redeemable" stablecoin from Paxos on a 1:1 basis for U.S. dollars.
Open Network Boasts of the Big-Time Partners
The network's list of "initial" partners includes fintech giant Robinhood, crypto exchange Kraken, digital asset and blockchain leader Galaxy, institutional disclosure platform for crypto Anchorage Digital, regulated blockchain infrastructure Paxos, digital asset exchange Bullish, and payments provider Nuvei.
The USDG website highlighted how Paxos, which will issue the new stablecoin, is a global leader in stablecoin issuance since 2018, with regulatory oversight from "top regulatory regimes around the world."
[1/4] Introducing Global Dollar Network, an open network designed to accelerate and reward global stablecoin adoption, powered by Global Dollar (USDG). Initial partners incl. @Anchorage, @Bullish, @galaxyhq, @krakenfx, @Nuvei, @Paxos & @RobinhoodApp.
— Global Dollar Network (@global_dollar) November 4, 2024
💻:https://t.co/RwFa3PmihB pic.twitter.com/6p2pdmyhNv
Robinhood Crypto's GM and VP, Johann Kerbrat, said stablecoins have been tried and tested in offering a bridge between TradFi and crypto. "We're pleased to support the Global Dollar Network's efforts to expand these opportunities, which align with our commitment to making financial access easier and more inclusive," Kerbrat said.
Kraken said it is "proud" to be one of the Global Dollar Network's partners. "The work starts now – accelerating global stablecoin adoption whilst raising the bar on trust, transparency, and collaboration," it added.
"Our role as an initial partner of the GDN is to ensure USDG meets the most important needs of institutions when it comes to stablecoins—seamless transactions, flexible trading, safe custody, and rewards. Anchorage Digital provides all of these in our support for USDG so institutions have a real and viable new option in USDG," said Nathan McCauley, co-founder and CEO of Anchorage Digital.
Charles Cascarilla, CEO and co-founder of Paxos, underscored the critical role stablecoins are playing in revolutionizing the financial system. He acknowledged that the existing leading stablecoins are unregulated, but with the USDG, users can expect GDN to "return virtually all rewards to participants and is open for anyone to join."
Designed to Take a Compliant Route
Since Paxos will be issuing the stablecoin, GDN has established from the start that it seeks compliance.
"Many stablecoins fall short of meeting the standards and consumer protections required by global enterprises. Outdated business models restrict adoption, driving up costs for blockchain ecosystems and the broader economy," the network said in a statement Monday.
$USDG Comes at a Critical Time in the Stablecoin Sector
The entry of the USDG comes at a time when USDT by Tether, the world's largest stablecoin by market cap, is in question amid reports of alleged corruption and investigations by the feds.
The Wall Street Journal reported late last month that Tether is being investigated for possible violations of sanctions and anti-money laundering regulations. Tether denied the report, calling the article "irresponsible reporting."
A user on X has also raised concern about how the sector may be growing too fast for the market to handle. "How many players can the market sustain?" the user asked. He wondered whether there will be a "tipping point" wherein stablecoins proliferate the overall market that instead of bringing in new opportunities, they damage the broader financial market instead.
