Paxos Doubles Down: Updated Proposal Aims to Secure Coveted USDH Stablecoin Mandate

Paxos just upped the ante in the stablecoin wars—submitting a refined bid to become USDH's official issuer.

The regulatory chess move

New York-based Paxos isn't just tweaking paperwork. They're strategically addressing every conceivable regulatory concern—liquidity frameworks, redemption mechanisms, reserve transparency—you name it. This isn't their first rodeo; they already issue PYUSD and Pax Dollar.

Why USDH matters

Winning the USDH bid means becoming the backbone of a potential digital dollar ecosystem. Control the stablecoin, control the flow—every finance giant knows this game. Paxos understands the assignment: play by the rules but rewrite the rulebook.

Behind the polished proposal

Speculation swirls about behind-the-scenes lobbying and technical concessions. Insiders whisper about enhanced audit frequencies and deeper banking partnerships—classic Paxos maneuvering. They’ve been building regulatory goodwill for years, and it shows.

Meanwhile, traditional banks are watching—and sweating. Another stablecoin success for Paxos? That’s more revenue they won’t see. Because why innovate when you can just charge overdraft fees?

Final verdict: Paxos isn’t just bidding—they’re positioning to dominate the future of digital dollars. Whoever wins USDH won’t just issue a stablecoin; they’ll shape its infrastructure for decades. Game on.

PayPal Partnership

The first major highlight of the proposal is the partnership with PayPal. HYPE tokens will soon be available for purchase on PayPal and its subsidiary Venmo, pending regulatory approval. At the same time, USDH will have free on/off ramps through PayPal’s platform, making it easy for users to access the stablecoin in all supported countries.

PayPal is also contributing $20 million in incentives to support HYPE and USDH adoption. Additionally, HYPE and USDH will be integrated into PayPal Checkout and Braintree, including the new “Pay With Crypto” solution.

Community Rewards and Governance

The community is at the heart of this plan. All USDH revenue will be reinvested into growing the platform and supporting Hyperliquid’s Assistance Fund (AF) until the total value locked (TVL) reaches $1 billion. After that, Paxos’ share of fees is capped at 5%, meaning they only benefit if USDH succeeds.

Ecosystem rewards will incentivize partners and platforms that contribute to USDH adoption.  The Hyperliquid community can vote on future distribution changes as the network grows.

Paxos also highlighted it is the only company that can issue stablecoins legally across Europe and other major markets, enabling SAFE global expansion. It will also support liquidity across Hyperliquid’s spot and perpetual markets and onboard asset issuers to HIP-3, Hyperliquid’s permissionless platform for creating new markets.

Growing USDH in a Competitive Market

Paxos already powers stablecoin services for platforms like Stripe, Mastercard, Robinhood, Nubank, Mercado Libre, and Interactive Brokers. Yet the race for USDH issuance is competitive. Frax Finance has proposed backing USDH with frxUSD, supported by BlackRock’s BUIDL fund, while Agora, Rain, LayerZero, Ethena Labs, and Sky also submitted proposals.

This bidding process shows how important Hyperliquid and stablecoins are in DeFi. Hyperliquid launched the search for a USDH issuer last Friday, with proposals due by September 10. Validators are set to vote on the winning proposal starting September 14, while the Hyperliquid Foundation will remain neutral in the decision.

Also Read: VanEck CEO Jan van Eck Publicly Pitches Partnership with Hyperliquid