Paxos Proposes USDH Stablecoin Compliant with Regulatory Standards
Stablecoin infrastructure company Paxos has put forward a proposal to introduce USDH, a stablecoin primarily focused on Hyperliquid that would fully adhere to the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act) and the Markets in Crypto-Assets (MiCA) regulatory standards.
As per the announcement made on Saturday, 95% of the interest accrued from USDH reserves will be allocated to buy back Hyperliquid’s native token HYPE, redistributing it among users, validators, and partner protocols.
“We propose the launch of USDH, a Hyperliquid-first, fully compliant stablecoin purpose-built to drive adoption, align incentives, and anchor the ecosystem’s next era of growth,” Paxos stated.
Paxos Labs, a newly established division within Paxos, will spearhead this initiative. The firm has acquired Molecular Labs, the developer responsible for Hyperliquid primitives LHYPE and WHLP, thereby deepening its understanding of Hyperliquid’s on-chain financial architecture.
USDH is set to be deployed across both HyperEVM and HyperCore chains. The project aims to enhance Hyperliquid’s appeal to institutions and mainstream fintech platforms by connecting it to global banking rails and providing regulatory clarity, as indicated by Paxos.
Paxos, which is already partnered with over 70 financial institutions and operates in key markets such as the US, EU, Singapore, Abu Dhabi, and Latin America, plans to utilize this infrastructure for the distribution of USDH.
The proposal includes an embedded rewards mechanism. Paxos intends to direct most of the yield from USDH reserves towards purchasing HYPE and redistributing that value back to the Hyperliquid ecosystem. This will encompass direct distributions to builders, validators, and users.
In addition to the stablecoin, Paxos indicates it will integrate HYPE into its brokerage infrastructure, which currently powers cryptocurrency services for PayPal, Venmo, and MercadoLibre.
Hyperliquid has established itself as a major player in decentralized perpetual futures, generating over $106 million in revenue last month on nearly $400 billion in trading volume.
This positions the platform with a significant 70% market share in the sector, with only Uniswap and PancakeSwap exceeding it in weekly trading volume, as reported.
