Gemini exchange to issue dollar pegged cryptocurrency
Gemini exchange has launched the Gemini dollar (GUSD), which is a US-dollar-pegged cryptocurrency built on Ethereum blockchain after the New York Department of Financial Services (NYDFS) gave an okay to Gemini Trust to proceed with the plan. The cryptocurrency, which is pegged to the dollar on a 1:1 ratio, will offer more credit and price stability for holders.
The mintable cryptocurrency will act as-as a regulated digital representation of the U.S. dollar and can be converted and withdrawn instantly as a stablecoin. Gemini customers to create and redeem Gemini dollars on the Gemini platform. Those willing to exchange U.S. dollars for Gemini dollars will initiate a withdrawal GUSD from their Gemini account to any Ethereum address. The GUSD is debited at their account.
Additionally, the customers can deposit Gemini dollars to their Gemini account in order to exchange Gemini dollars for U.S. dollars. The USD is then credited to their account at the time of deposit.
No doubt there has been a surge of stablecoins in the last several months, but this offers more promise due to the oversight of U.S. regulators. The New York State Department of Financial Services (NYDFS) will oversee Gemini accounts.
Circulation is held at omnibus banks insured by the Federal Deposit Insurance Corporation.
The cryptocurrency can be transferred on the Ethereum network according to its whitepaper. It is meant to solve the price volatility problem, which is a major problem for many cryptocurrencies. This will make the Gemini dollar more useful as a medium of exchange and unit of account. It means holders can expect the value of the coin not to fluctuate below the dollar when accepting it for payment or when holding coins.
For instance, a merchant would feel more shielded against change in crypto value when accepting a stable coin while a holder can convert his crypto savings to a stable coins and hold them in stable coins to avoid loss of value. But that also means losing the opportunity to gain from price surges.
The white paper says that other stablecoins lack the combination of supervision, transparency, and examination. In order to achieve desirable outcomes, it would be necessary for a system to have oversight. Thus the "issuer must be licensed and subject to regulatory supervision" in order to assure transparency that engenders market confidence and trust.
Paxos, another blockchain startup, also announced on Monday that it had launched a stable coin after receiving notice from the New York Department of Financial Services (NYDFS).
The cryptocurrency is also backed on a 1:1 ratio to the U.S. dollar. Paxos CEO said and co-founder Charles Cascarilla said that the new stable coin will make it possible for financial markets to transact by way of a "fully USD-collateralized asset" while taking advantage of blockchain technology.
The ERC-20 standard can be exchanged between two Ethereum addresses and only verified Paxos customers will be able to buy and redeem the tokens on the company's website. Just like the GUSD, the Paxos tokens in circulation will be backed by dollars that are held in the firm's custody.
Anyone using the company's itBit exchange or other over-the-counter trading desk can cash out crypto holdings using the token, immediately. The token will also be listed on other exchanges under the symbol PAX.