Kraken Plans USDH Listing as Paxos Competes for Hyperliquid: The Stablecoin Wars Escalate

Kraken's gearing up to list USDH—just as Paxos makes a power play for Hyperliquid's turf. It's the latest volley in the escalating battle for stablecoin supremacy.

Exchange Arms Race Heats Up

Major platforms are scrambling to lock down partnerships and listings, betting big on the next generation of dollar-pegged tokens. Kraken's move signals deepening institutional confidence—while Paxos's aggressive expansion hints at a land grab before regulators fully stir.

Liquidity Is the New Oil

Who controls the stablecoins controls the rails. With deep liquidity and seamless integrations at stake, exchanges aren’t just listing assets—they’re picking sides in a financial cold war.

And as always in crypto, follow the money—until the SEC follows you.

Paxos Submits Proposal to Launch Hyperliquid’s Stablecoin

On September 5, Hyperliquid announced that the USDH ticker will be released through an on-chain validator voting process. The stablecoin will be backed 1:1 by the U.S. dollar and is intended to serve as a canonical token symbol aligned with Hyperliquid’s principles. Validator-selected teams will compete to build and deploy USDH on-chain.

Following this, many stablecoin issuers started bidding to win the stablecoin contract, one of them being Paxos. Paxos submitted a proposal for its new Paxos Labs team to manage the USDH stablecoin. The initial plan offered smooth, fee-free swaps from USDC. Additionally, it also promised to return 95% of interest earnings to Hyperliquid through HYPE token rewards and buybacks. 

It followed its initial September 6 proposal with its recently published Version 2 proposal on September 10. The updated plan includes three major upgrades: a new partnership with PayPal, better community rewards, and global expansion efforts.

A Tough Competition

Paxos is seeming to come out on top, but the competition is intense. Frax Finance has also submitted plans to back USDH with frxUSD and has the support of BlackRock’s BUIDL fund, while Agora, Rain, LayerZero, Ethena Labs, and Sky have made submissions as well.

Separately, Kraken has expanded its services in the EU by allowing customers to trade over 60 tokenized U.S. stocks, including Apple, Meta, and GameStop. These blockchain-based tokens mirror real share prices and are powered by Backed Finance’s xStocks platform. The service builds on an earlier rollout that Kraken started in May in other markets.

Meanwhile, Hyperliquid’s final decision will be made by a validator vote on September 14, 2025.

Also Read: Sky (MakerDAO) Joins Hyperliquid’s USDH Stablecoin Issuance Race