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Aleo and Paxos Labs Launch Privacy-Focused Dollar Stablecoin Aimed at Institutions
The USAD token encrypts transaction data end-to-end, aiming to enable private, programmable digital dollars.
Updated Oct 1, 2025, 1:13 p.m. Published Oct 1, 2025, 12:00 p.m.
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What to know:
- Paxos Labs and the Aleo Network Foundation have launched a privacy-focused stablecoin called USAD, pegged to the U.S. dollar.
- The USAD token is built on Aleo's zero-knowledge blockchain and aims to appeal to financial institutions by encrypting wallet addresses and transaction amounts.
- The project has received backing from major investors like a16z, Coinbase Ventures, and SoftBank.
Paxos Labs and the Aleo Network Foundation are working to launch a U.S. dollar-pegged stablecoin that aims to preserve user privacy, and appeal to financial institutions, the companies said.
Unveiled on Wednesday, the USAD token was built on Aleo’s zero-knowledge (ZK) layer 1 blockchain and issued through Paxos Labs, an infrastructure provider that was incubated under Paxos, the firm behind popular stablecoins such as and the Global Dollar (USDG).
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Stablecoins are a fast-growing class of cryptocurrencies that are increasingly considered as a cheaper, faster alternative for moving money globally. They are tokens with prices tied to fiat money like the U.S. dollar, and use blockchains to settle transactions. Interest in stablecoins has accelerated with U.S. President Donald Trump signing the GENIUS Act into law earlier this year, enacting federal standards for stablecoin issuers.
Unlike conventional stablecoins such as Tether's USDT and Circle's USDC, Aleo's stablecoin encrypts wallet addresses and transaction amounts, shielding them from public view.
That design could appeal to financial institutions wary of exposing sensitive transactions data on-chain.
"Stablecoins have proven to be one of the most powerful innovations in financial markets, and we are only scratching the surface," said Bhau Kotecha of Paxos Labs in a statement. USAD aims to "bring digital dollars into a new era where enterprises can embed money that is private, programmable and trusted from the ground up," he added.
The new token fits into The Aleo Network Foundation's focus of developing cryptographic tools that allow for programmable transfers without revealing counterparties. The project drew venture capital backing from a16z, Coinbase Ventures and SoftBank among others.
"Privacy is the missing link in blockchain adoption at scale, and with USAD we are proving it can exist in a programmable stablecoin," said Leena Im, chief operating officer at The Aleo Network Foundation. "By pairing Aleo’s technology with Paxos Labs’ issuance stack, we are taking a joint, front-door approach with enterprises to show that digital dollars can be both trusted and transparent to oversight while protecting user confidentiality."
AI Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk's full AI Policy.
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From Wall Street to Web3: This is crypto’s year of integration, Silicon Valley Bank says
From bank-led stablecoins to tokenized T-bills and AI-powered wallets, digital assets will move from pilot projects to financial plumbing this year.
What to know:
- Silicon Valley Bank's Anthony Vassallo says institutional adoption of crypto is accelerating, pushing bigger venture capital checks, more bank-led custody and lending, and deeper M&A consolidation.
- Stablecoins are emerging as the “internet’s dollar,” fueled by clearer regulation and enterprise demand for payments and settlement.
- Tokenized real-world assets and AI-driven crypto applications are shifting blockchain from speculation to core infrastructure, the bank said.
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