Comparison to Stablecoins

USDY is not classified as a traditional stablecoin; instead, it is a tokenized secured note. Like stablecoins, USDY operates as a bearer asset that can be transferred to investors without their needing to be onboarded with the issuer, although onboarding is necessary for minting or redeeming. However, unlike with stablecoins, USDY holders earn almost all of the yield from the assets that back USDY.Below is a table that compares stablecoins and USDY:

	Stablecoins	USDY
Bankruptcy-remoteness	Stablecoins are generally issued out of operating companies. If a stablecoin issuer went bankrupt, including for reasons unrelated to operating their respective stablecoins, holders may be unable to redeem	USDY is issued by Ondo Global Markets (BVI) Limited, a company that is designed to be bankruptcy-remote from any other entities, including Ondo operating companies
Yield	Stablecoin holders receive no direct interest	USDY holders receive yield generated from the underlying assets (less amounts to satisfy fees, obligations, and expenses) in the form of increasing redemption value
Secured by high-quality assets	Stablecoins are generally unsecured liabilities of their issuers with no security interest in the assets that back them and are at risk of being subordinated to the claims of other creditors	USDY holders have a security interest in the assets that back it
Regulatory status	Stablecoins exist in a regulatory gray area and are not structured in a way to be able to pay holders a yield	USDY is issued in compliance with US federal and state securities and financial crime compliance laws
Third-party oversight	Stablecoin issuers can, in many cases, unilaterally change the type of assets that back them	Ankura Trust Company protects USDY holders as Verification Agent and Collateral Agent, enforcing narrow eligibility criteria and is able to force a wind-down in an event of non-compliance
Timely redemptions	If stablecoin issuers fail to meet redemption requests within a timely manner, there would be no Event of Default nor automatic wind-down process. Rather, stablecoin holders would likely need to litigate in court to recover their assets	If either Ondo USDY LLC (the previous issuer of USDY) or Ondo Global Markets (BVI) Limited fails to meet a redemption request in a timely manner, an Event of Default will occur, mandating Ankura Trust to liquidate the investment portfolio and repay token holders, subject to USDY holder approval

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Comparison to Stablecoins