At the Bretton Woods Conference in 1944, the US dollar was established as the world’s foremost reserve currency, replacing the British pound sterling. Under the Bretton Woods system, other countries fixed their exchange rates to the US dollar, and the US promised to redeem dollars for gold at a fixed rate of $35 per ounce. This system allowed for stable exchange rates and facilitated international trade.
Unfettered access to a stable and universally recognized currency remains paramount for individuals and enterprises alike, nearly sixty years after Bretton Woods, in an increasingly interconnected global landscape. Paxos’ pioneering stablecoin, USDP, provides an innovative contemporary solution by enabling regulated, seamless access to the esteemed US dollar.
Enterprise consideration of USDP
As the digital economy evolves, stablecoins, specifically those pegged to US dollars, will likely bridge traditional financial systems and the emerging world of decentralized finance. Dollar-backed stablecoins help businesses by providing a reliable and stable digital currency that minimizes volatility risks, facilitates efficient cross-border transactions and enables seamless integration with blockchain technology for enhanced financial operations.
The Pax Dollar, or USDP, issued by Paxos, a regulated trust company, is redeemable one-to-one for US dollars and offers many unique advantages as an industry-leading fiat stablecoin:
- Redeemable one-to-one. USDP reserves are held 100% in cash and cash equivalents as directed by our primary regulator. Paxos offers unparalleled assurance to customers that their USDP is backed one-to-one by the dollar and customers can convert it to equivalent USD at any time.
- Regulated. Paxos and USDP are regulated by the New York State Department of Financial Services, meaning that USDP reserves are subject to strict regulatory oversight and meet the highest consumer protection standards. Reserves are never commingled and fully segregated.
- Available to anyone. With a mobile phone, you can use USDP to store and send money or access crypto markets. USDP provides financial access to everyone – including the global 1.7 billion adults without bank accounts.
- Provides the ability to send money easily and safely. As a regulated, trusted digital dollar, USDP allows customers to store and send US Dollars with freedom–unrestricted by the limits of traditional banking.
- Surpasses our leading competitors whose stablecoins are more risky. USDT and USDC reserves are not subject to the same regulatory oversight as a Trust company. Consumers who use these stablecoins cannot have confidence that they will be redeemable for their full USD amount under all circumstances, including bankruptcy. USDP reserves are held in cash and cash equivalents bankruptcy remote under regulatory supervision, ensuring a dollar-for-dollar redemption at any time.
4 things USDP can do to enhance the financial system
USDP stablecoin can provide significant benefits to the financial system by increasing financial inclusion, efficient money movement and instantaneous settlement to the everyday consumer and mainstream financial firms. Here are four more ways USDP can significantly impact the financial system of the future:
- Use as a global reserve currency
The US dollar is the world’s most widely accepted and recognized reserve currency. Many countries and institutions hold US dollars as a form of international trade and investment. Having access to US dollars enables individuals and businesses to participate in global commerce and financial activities.
One crucial aspect contributing to the US dollar’s unmatched status is the economic stability and robustness of the United States, which has maintained a formidable position as the world’s largest economy. This economic might, coupled with a sophisticated and highly developed financial system, has historically reinforced the credibility and reliability of the US dollar as a safe haven for investors and a trusted medium of exchange.
The strategic accumulation of US dollars by various entities serves multifaceted purposes:
- Governments recognize the significance of holding substantial dollar reserves to effectively manage their domestic economies and navigate potential financial crises.
- Enterprise institutions, ranging from multinational corporations to financial intermediaries, actively acquire US dollars to facilitate their operations in global markets.
- Similarly, consumers recognize the advantages of holding US dollars as a store of value and as a means of diversifying their financial portfolios.
USDP provides transparency and assurance to users that the stablecoin is backed by actual assets, which can help increase confidence in the stablecoin and its use as a digital representation of the US dollar. To maintain transparency, USDP is examined monthly by a top-ranking accounting firm to verify that the supply of stablecoins matches the reserve of US dollars. Paxos makes public the independent review by publishing the reviewer’s monthly attestations detailing the amount in reserves to the penny. This provides ongoing assurance to users that the stablecoin is fully backed by US dollars and available for redemption at any time, which can help increase trust in its use, and in global currency reserves.
- Expand investment opportunities
The inherent strength and vitality of the US economy renders it an undeniable allure for discerning global investors who are seeking to optimize their capital allocation. To fully capitalize on the array of investment prospects that the United States offers, it becomes imperative to acquire US dollars.
US dollars serve as the key that unlocks a range of investment opportunities spanning equities, bonds, real estate and various other financial instruments. For global enterprises in investment mode, acquiring US dollars assumes primary importance as it enables seamless access and participation in the investment options available within the United States. In capital markets, the US dollar facilitates liquidity and efficiency, enabling institutions and enterprises to deploy their financial resources with ease and confidence.
In addition to equities, bonds, and real estate, the US dollar enables participation in a wide spectrum of financial instruments such as mutual funds, exchange-traded funds (ETFs), derivatives, and venture capital. This expansive range of investment options provides businesses with the flexibility to tailor their investment portfolios to their specific objectives, risk tolerance and time horizons.
The use of USDP can reduce transaction costs and settlement times, which can increase liquidity in the market and provide greater investment opportunities for traders and investors. Paxos USDP stablecoin is also regulated by the New York State Department of Financial Services (NYDFS), which can provide greater transparency and regulatory oversight, further increasing confidence in the stablecoin and its use in investment opportunities.
As the use of stablecoins continues to grow, USDP has the potential to provide a more accessible and secure option for investors looking to diversify their portfolios and hedge against market volatility.
- Inspire and innovate international trade
The ubiquity of the US dollar as the go-to currency for pricing major commodities is deeply ingrained in the fabric of global trade, but traditional cross-border transactions can take days to settle and involve high fees. In contrast, USDP can be settled instantly, and with low transaction fees, which can significantly reduce the cost and time involved in international trade.
The benefits of accessing US dollars extend beyond mere convenience. They encompass the facilitation of swift and efficient cross-border transactions, the mitigation of exchange rate risks and the leveraging of opportunities arising from international market fluctuations.
Using USDP in international trade reduces currency risk. Traditional cross-border transactions involve currency conversions, which can expose businesses to fluctuations in exchange rates and currency risk. USDP is pegged to the US dollar, which reduces currency risk and provides greater stability in international trade.
USDP can also help confidence in international trade with transparency, while improving the overall speed and efficiency of transactions. Today, traditional cross-border transactions can take days to settle and involve high fees. In contrast, USDP can be settled instantly and with low transaction fees, which significantly reduces the cost and time involved in international trade. Maybe most significantly, USDP can help to facilitate new markets and new ways of facilitating trade finance.
- Hedge against currency volatility
In nations grappling with the challenges posed by volatile or inflationary local currencies, the US dollar emerges as a critical instrument, offering a robust shield against the potential currency devaluation. The strategic accumulation of US dollars equips enterprises (and consumers) with a mechanism to reinforce their purchasing power, effectively mitigating the adverse effects stemming from unpredictable local currency fluctuations. This approach safeguards their financial well-being and ensures the preservation of their hard-earned assets.
Paxos’ USDP can help enterprises hedge against volatility by providing a stable and secure digital asset that is fully backed by US dollars, providing a hedge against market volatility and inflation, which can be particularly beneficial for enterprises looking to manage their financial risks. Additionally, USDP can provide a stable and secure option for enterprises looking to diversify their assets and hedge against market volatility.
As the use of stablecoins continues to grow, Paxos USDP stablecoin has the potential to become an essential tool for enterprises looking to manage their financial risks and increase their investment opportunities.
USDP and the future of finance
Enterprises are seeking solutions to an increasingly complex financial ecosystem in need of innovative solutions. USDP emerges as a transformative instrument, empowering enterprises and their customers with unprecedented access to the revered US dollar currency.
By unlocking opportunities in global commerce, investment, financial services, travel, and beyond, USDP transcends the limitations of geographical boundaries and ushers in a new era of seamless connectivity. The US dollar’s unmatched stability, global acceptance and indisputable reputation position USDP as an indispensable tool for navigating the intricacies of our increasingly interconnected world.