Today Standard Chartered announced that it will provide cash management, trading and custody services for Paxos stablecoins issued outside of the United States. Paxos issued the Lift Dollar (USDL) out of Abu Dhabi (market cap $54m) and the Global Dollar (USDG) out of Singapore (market cap $29 million). It also has onshore stablecoins such as Paypal USD (PYUSD) which are not part of this arrangement. The vast majority of reserve assets are held in short dated US Treasuries.
When Paxos unveiled the Global Dollar last month, it said that DBS Bank would provide custody and cash management.
“Our partnership with Paxos reflects Standard Chartered’s commitment to shaping the future of digital finance with trust and innovation,” said Standard Chartered’s John Collura. “By providing robust cash management, trading, and custody services, we’re enabling the next generation of secure and regulated digital assets solutions that drive global adoption and economic inclusion.”
Zodia Markets, a startup incubated by Standard Chartered’s SC Ventures, is also exploring the use of stablecoins to address APAC settlement challenges now that the U.S. has moved to T+1 for securities settlement.
With ETFs and the U.S. election triggering the latest crypto cycle, banks are keen to grab the business opportunities. Deutsche Bank has expanded its cash services with cryptocurrency exchange Crypto.com.
Paxos stirs the stablecoin pot
Meanwhile, the Paxos issued Global Dollar was only unveiled last month ago, but is novel in several ways. Apart from Paxos, its founding partners include Robinhood, Nuvei, Kraken, Anchorage Digital, Galaxy and Bullish. So far the action mainly appears to be Paxos and Anchorage Digital. Paxos aims to share revenues earned on the Treasuries with its partners. In theory that could mean trading pairs could be quoted against USDG instead of Tether. But it remains to be seen whether that happens.
The current big stablecoins Tether and Circle’s USDC could respond by offering incentives behind the scenes. Today’s announcement of a collaboration between Circle and the Binance cryptocurrency exchange came as a surprise and may be a sign of that happening. Coinbase was a partner in USDC, although the relationship was recently restructured, with Coinbase becoming a shareholder. As a result, Binance made limited use of USDC. Until now.
