Global Dollar Stablecoin Targets Hundreds of Partners Lured by Returns, Anticipates Major Players from Traditional Finance

It’s just the beginning for USDG, a stablecoin launched in November, with the potential for a thousand companies to participate in its promotion in exchange for a portion of the earnings from reserve assets, as stated by Kraken, one of its original partners.

USDG, backed by firms like Robinhood, Paxos, Galaxy Digital, and Anchorage Digital, recently added 19 new partners, predominantly from the cryptocurrency sector. Traditional banks and sizeable financial institutions are also showing interest, according to Kraken’s Mark Greenberg.

“We currently have over 25 partners, and in a month, we anticipate announcing another 25, leading us up to 1,000. I’m particularly thrilled about the major entities on both the traditional finance and crypto sides that we’re approaching,” Greenberg mentioned during a discussion. “Several banks are in talks, and I believe some will soon join our initiative.”

The dollar stablecoin arena has largely been ruled by two major entities: Tether’s USDT, which holds a market cap exceeding $150 billion, and Circle’s USDC, with a market cap around $60 billion. In contrast, USDG is ranked 24th among stablecoins with a market cap of only $276 million.

Paxos, the regulated New York entity supporting USDG, previously aimed to compete with USDT and USDC through a collaboration with Binance, but that partnership was dissolved due to regulatory complications.

Greenberg emphasized that USDG operates as a genuine consortium, with Paxos acting as a distribution partner responsible for specific administrative tasks.

“We’re creating a decentralized community around this stablecoin, where yields benefit all involved,” Greenberg explained. “Among the founders, if we were a real estate company, Paxos would be our property management team, ensuring compliance and proper treasury management. Each of us is equally invested in the success of the global dollar network.”

The consortium’s growth is propelled by its emphasis on yield, a strategy that not only attracts firms to join but also redefines stablecoins as integral components of the broader financial landscape. This approach is intended to challenge the prevailing positions of Tether and Circle.

“I favor decentralization over centralization. It’s essential to return value to users, which USDG achieves in ways that Circle or Tether currently do not,” Greenberg stated. “While Tether and Circle generate significant profits, traditional banking allows minimal returns on deposits, which should not be the case with stablecoins.”

Kraken handles substantial global financial transactions and naturally employs USDG in its operations, a common practice in business jargon known as “eating your own dog food.”

“We utilize USDG across the globe,” Greenberg remarked. “Sending a wire transfer can take several days and might be delayed by intermediary banks. That’s changing rapidly, with players like Visa and MasterCard stepping in, showing that stablecoins can become far more significant in this space.”

Kraken’s clientele is benefiting from the opportunity to earn as much as 4.1% on U.S. dollars internationally through their deposits in USDG, according to Greenberg.

“For U.S. clients, this may not seem particularly exciting due to alternative options. However, in countries like Argentina or Canada, where U.S. dollar accounts are nonexistent, earning 4.1% is revolutionary. It presents an exciting opportunity.”