New stablecoin in ADGM: UAE-based Paxos International, an affiliate of Paxos, launched the Life USD (USDL), a yield-bearing stablecoin regulated by the Abu Dhabi Global Market’s Financial Services Regulatory Authority (FSRA), according to a Paxos press release. USDL will offer holders an annual yield of approximately 5%, Bloomberg writes.

How it works: USDL offers holders daily yield from US government securities and cash equivalents, overseen by the FSRA. The stablecoin is issued on the Ethereum blockchain.

“USDL is a first-of-its-kind — a regulated product, earning and paying safe yield on a daily basis. Until now, only centralized issuers have benefitted from the economics of stablecoin reserves,” CEO Charles Cascarilla said.

Why Abu Dhabi? Paxos wanted to make USDL “available in jurisdictions where we have a lot more confidence that it is able to comply with all the different rules and regulations and laws,” Cascarilla told Bloomberg. In the US, scrutiny over stablecoins could lead to it being viewed as a type of security, governed by a different set of regulations.

Background: Accessing stablecoins is currently limited in places like the US, UK and Japan due to prohibitive local regulations, according to Bloomberg. The UAE is currently working on its own regulations to govern and license stablecoins.

Can stablecoins in the UAE be USD-backed? Reports have circulated recently claiming that only AED-backed stablecoins are accepted in the UAE, though Baker McKenzie partner Mazen Boustany told Enterprise the CBUAE has yet to issue regulations around stablecoins.

Where will USDL be used? Argentina will be the USDL’s debut market where users can access the stablecoin through distribution partners Ripio, Buenbit and TiendaCrypto.

ICYMI- The Dubai Financial Services Authority earlier this week eased regulations around unrecognized crypto tokens and stablecoins. The Dubai-based financial authority issued fresh regulations for stablecoins that demand reserves matching or exceeding the token's total value, in the same fiat currency, composed of stable, liquid, diversified, and low-risk assets.

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