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 USDY LLC, 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, and USDY is the only debt of Ondo USDY LLC |
| 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 will be 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 Ondo USDY LLC 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 |
USDY Legal Disclaimer
USDY tokens have not been registered under the US Securities Act of 1933, as amended ("Act") or the securities or financial instrument laws of any other jurisdiction, and may not be offered or sold in the US or to US persons unless registered under the Act or an exemption from the registration requirements thereof is available. The Tokens are offered and sold in the European Economic Area and the United Kingdom solely to qualified investors, and in Switzerland solely to professional clients. Other jurisdiction-based prohibitions and restrictions apply. Ondo USDY LLC, the issuer of USDY, is not registered as an investment company under the US Investment Company Act of 1940, as amended, or as an Alternative Investment Fund or Undertaking for Collective Investment in Transferable Securities in the European Economic Area, or under the securities or financial instrument laws of any other jurisdiction. Nothing herein constitutes any offer to sell, or any solicitation of an offer to buy, USDY. Nothing herein constitutes investing advice. Acquiring USDY involves risks. A USDY holder may incur losses, including total loss of their purchase price. Past performance is not an indication of future results. Additional terms apply. See docs.ondo.finance/legal/terms-of-service, docs.ondo.finance/general-access-products/usdy and ondo.finance/usdy (opens in a new tab) for details.