Leading finance and cryptocurrency firms have come together to launch the Global Dollar Network, an open framework designed to expand the use of stablecoins.
Launch of Global Dollar Network
A coalition of major traditional finance and cryptocurrency companies has announced the creation of the Global Dollar Network. Key participants include Robinhood, Galaxy Digital, Kraken, and Paxos. The initiative aims to enhance the adoption and utility of stablecoins on a global scale. Participants in the consortium may include custodians, exchanges, fintech companies, merchants, protocols, card networks, banks, and investment platforms. An advisory committee, comprising representatives from partner organizations, will guide the network's direction.
Role of Global Dollar in the Network
At the center of the network is the Global Dollar (USDG), a stablecoin pegged to the US dollar. USDG is backed 1:1 by US dollar deposits, short-duration US government securities, and other cash equivalents. DBS Bank, Singapore's largest banking institution, will manage the US dollar reserves for USDG. This adds a layer of trust and security. Arjun Sethi, Co-CEO at Kraken, noted: "[CITE_W_A] The lack of competition in the regulated stablecoin market has prevented the industry from reaching its full potential. USDG upends this dynamic with a more equitable model that will bring mainstream participants into the ecosystem and accelerate new stablecoin use cases."
Addressing Challenges in the Stablecoin Market
The launch of the Global Dollar Network comes at a time when many existing stablecoins struggle to meet the standards required by businesses and consumers. In a recent statement, the firms highlighted that outdated business models and high transaction costs limit enterprise adoption and stifle innovation. The Global Dollar Network aims to address these challenges by offering a stablecoin that provides tangible economic benefits to all its partners. Charles Cascarilla, CEO and Co-Founder of Paxos, stated: "[CITE_W_A] The leading stablecoins are unregulated and retain all the reserve economics. Global Dollar Network will return virtually all rewards to participants and is open for anyone to join. It is designed to incentivize global stablecoin usage and accelerate societal wide adoption of this technology." According to Paxos, its USDG stablecoin will be issued out of Singapore, conforming to the Monetary Authority of Singapore's upcoming framework for stablecoins.
The Global Dollar Network promises to open new opportunities for stablecoin adoption, engaging participants while ensuring their reliability and security.
