All Aboard The Stablecoin Crypto Train!
As reported by Ethereum World News on September 10th, the Winklevoss Twins, well-known for their entrepreneurial mindset and affection towards crypto, revealed that they would be launching an Ethereum-based token that would be backed by U.S. dollars.
The token, dubbed “Gemini Dollar” by the two, will be a USD-focused stablecoin that will be FDIC-insured by legacy market giant State Street. Many saw this as quite bullish news, as the New York Department of Financial Services (NYDFS) put its regulatory ‘stamp of approval’ on the Gemini Dollar plan, but surprisingly enough, the market didn’t budge one bit.
At the same time, it seems that Paxos, a lesser-known blockchain startup, also got regulatory approval for a similar stablecoin product, as revealed in a tweet (seen below) from the firm that was posted during the wee hours of Monday morning.
Thrilled to announce that today we launched Paxos Standard token (PAX), the world’s first token issued directly by a regulated Trust company. PAX is fully collateralized 1:1 with USD in reserve bank accounts. Find out more here! https://t.co/aaYQThF4oW pic.twitter.com/d7wKxBM8Os
— Paxos (@PaxosGlobal) September 10, 2018
Paxos then issued a press release on the matter, highlighting the token and the firm’s aspirations for the product. Paxos Standard, as the startup named it, is apparently the “world’s first regulated crypto asset,” as these tokens are issued by Paxos’ Trust Subsidiary and are approved and overseen by the NYDFS, the aforementioned governmental body. In a comment on its qualifications for the stablecoin project, Paxos wrote:
As a Trust company, Paxos is a fiduciary and qualified custodian of customer funds, and can therefore offer greater protections for customer assets than any other existing stablecoin. Dollar deposits are always held in segregated accounts at multiple FDIC-insured U.S.-domiciled banks.
As alluded to in the aforementioned statement, the Paxos Standard is fully collateralized one-for-one by USD reserves, allowing its users to obtain “a liquid, digital alternative to cash that is available 24/7 for instantaneous transaction settlement and is fully redeemable.”
The firm’s executive team also expressed their enthusiasm for the project, with CEO & co-founder Charles Cascarilla noting that this new product will have an astounding influence on financial markets, allowing corporations and investors “to transact in a fully USD-collateralized asset with the benefits of blockchain technology and oversight from financial regulators.”
Cascarilla added that Paxos Standard should be seen as a “significant advancement in digital assets,” as such a product will combine the best of both the traditional financial system and a “frictionless global economy.”
Now, more on the details of this new-fangled stablecoin.
According to the aforementioned press release, “verified” Paxos customers will be able to purchase and redeem Standard tokens right on the firm’s website at a 1:1 ratio with U.S. dollar holdings. The amount of Paxos Standard in circulation is the amount of USD held in reserve accounts, so once users redeem their stablecoins for dollars, Standard tokens will be destroyed on the spot.
In an unexpected move, it was added that traders using the ItBit exchange or OTC desk will reportedly be able to exchange their cryptocurrencies for Paxos Standard tokens “instantaneously.” But these stablecoins won’t be limit to this lesser-known exchange, as it was also noted that Paxos Standard can be listed on other “venues” under the ticker symbol “PAX.”
Closing off the release, the aforementioned CEO and co-founder of the firm wrote:
In the current marketplace, the biggest hindrances to digital asset adoption are trust and volatility. As a regulated Trust with a 1:1 dollar-collateralized stablecoin, we believe we are offering an asset that improves on the utility of money.