Aleo and Paxos Labs Introduce USAD, a Privacy-Focused Stablecoin Built for Institutional Scale
Key takeaways
- USAD encrypts transactions using zero-knowledge cryptography to keep identities and amounts private without sacrificing compliance.
- The stablecoin is built on Aleo's layer 1 blockchain and backed by Paxos Labs’ regulated financial infrastructure.
- Legislative momentum and high stablecoin volumes suggest increasing demand for programmable digital dollars with stronger privacy.
A new chapter for stablecoins: privacy meets compliance
Aleo Network Foundation has teamed up with Paxos Labs to launch USAD, a U.S. dollar stablecoin that brings data confidentiality to blockchain finance. Built on Aleo’s privacy-centric layer 1 blockchain and supported by Paxos Labs’ institutional infrastructure, USAD is designed to deliver programmable money with end-to-end encrypted transactions.
This marks the first time a U.S. dollar stablecoin has launched on a layer 1 blockchain built for privacy. Unlike traditional stablecoins that make transaction details publicly visible, USAD hides both participant identities and transaction amounts using zero-knowledge proofs — a cryptographic technique that confirms validity without revealing any underlying data.
According to Leena Im, Chief Operating Officer at the Aleo Network Foundation, this approach could shift how enterprises view blockchain.
"Privacy is the missing link in blockchain adoption at scale, and with USAD, we are proving it can exist in a programmable stablecoin. 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." — Leena Im, Chief Operating Officer at The Aleo Network Foundation
The privacy improvements come at a time of growing interest in regulated digital assets. In 2024, stablecoins processed $27.6 trillion in transactions — exceeding the combined annual volumes of Visa and MasterCard by over 7%. The trend is expected to continue following the recent passage of the Genius Act in July 2025, which introduced clearer oversight frameworks for U.S.-issued stablecoins.
Institutional-grade design, built for developers
USAD merges Aleo’s encrypted smart contract capabilities with Paxos Labs’ proven experience in stablecoin issuance. Paxos Labs, an offshoot of Paxos, brings to the table over $120 billion in tokenization experience. Its infrastructure has been used by names like Binance Alpha, Revolut, Worldpay, and Request Finance, and is a core part of the Global Dollar Network, a consortium founded to standardize and expand the use of digital dollars.
The launch of USAD builds on Aleo’s vision to create a secure foundation for programmable payments. With support from investors such as a16z, SoftBank, and Coinbase Ventures, the Aleo Network has positioned itself as a leading player in privacy-preserving blockchain infrastructure. It combines compliance-ready architecture with zero-knowledge cryptography to deliver tools for enterprises building secure on-chain financial systems.
"Partnering with Aleo allows us to bring digital dollars into a new era where enterprises can embed money that is private, programmable, and trusted from the ground up." — Bhau Kotecha, Paxos Co-Founder
Conclusion
As regulation around digital assets advances and stablecoin adoption continues to accelerate, USAD introduces a novel option for institutions seeking to combine programmable finance with strong privacy guarantees. By integrating Paxos Labs’ compliant infrastructure with Aleo’s cryptographic capabilities, USAD could pave the way for wider enterprise use of stablecoins — without sacrificing user confidentiality or regulatory compatibility.
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