Bitcoin

Banks to Mint USDF Stablecoin following the Launch of the USDF Consortium

Banks who were once against the blockchain space at its infancy have turned around and warmed up to it. The USDF Consortium, an affiliation of FDIC-insured banking firms, has officially launched with an objective to build networks of financial institutions to advance the growth and integration of a bank-minted stablecoin. This will allow for the approved movement of assets on the blockchain and would serve as an opportunity for banks to benefit from the endless possibilities on the blockchain.

What is USDF?

USDF is a bank-issued stablecoin that competes with non-bank-issued stablecoins. The proposed crypto will be created by US banks and will be redeemable for cash from member banks. According to the network, the goal is to provide greater user protection than uncontrolled stablecoins.

USDF will run on the Provenance Blockchain, a  proof-of-stake network created in May 2021 by the Provenance Foundation, based in San Francisco, California. Since USDF is now available on a public blockchain, banks and their clients will be able to utilize it for a variety of uses, including capital call financing, invoice, and supply chain finance, in addition to peer-to-peer and business-to-business money transfers.

Reaction to the news

Reacting to the news, Figure CEO Mike Cagney said, “USDF opens up endless possibilities for the expanding world of DeFi transactions. The ease and immediacy of using USDF for on-chain transactions was demonstrated this fall when NYCB minted USDF used to settle securities trades executed on Figure’s alternative trading systems. We are tremendously excited that NYCB expects to be minting USDF on demand and on a regular basis in the coming weeks.”

According to Andrew Kaplan, NYCB’s Chief Digital and Banking Service Officer, this initiative will meet the demands of customers. He said,  “This will solve a critical need to move funds on the blockchain, and it does so in a way that can scale, adheres to regulatory standards, and is acceptable to all users from large institutional investors to retail customers.

Andrew further added that “As a form of digital currency created and administered by regulated U.S. banks within the USDF Consortium, USDF will enable wide use of an on-chain, real-time payments system that satisfies important principles of safety and soundness, compliance with anti-money laundering standards, and financial stability.”

In reaction to the news, Bea Ordonez, Chief Financial Officer of Sterling National Bank, said, “Our membership in the Consortium will enable us to integrate real-time payments into our operating model, allowing us to leverage the benefits of blockchain technology to streamline multi-party decision-making processes and provide certainty of settlement. We are exploring specific segment-focused use cases that are relevant to our commercial model, including potential applications to commercial lending and loan syndications.”  

The USDF Consortium is laying the groundwork for banks to use blockchain as a game-changing technology for sustainable expansion and creativity. Interested banks can read more about the Consortium, the USDF, and the membership requirements at www.usdfconsortium.com, as well as apply to join.

Winklevoss Twins Company launches Gemini Dollar StableCoin backed by U.S Dollars

Gemini Trust Company, founded by Winklevoss twins, received New York Department of Financial Services (NYDFS) approval to launch its first cryptocurrency on the Ethereum blockchain called the Gemini Dollar. The Gemini Dollar will be backed by USD in the hopes of becomes a stablecoin that can help facilitate investor onboarding and trading with cryptocurrency assets.

The Stability factor behind Gemini Dollars

The Winklevoss established the Gemini cryptocurrency exchange which ranks at 54th position globally by size. Currently it supports Bitcoin, Zcash and Ethereum. The Gemini Dollar would be different as it has been designed to be a medium of exchange with the value pegged to the US dollar. Tyler Winklevoss explained, “One doesn’t always spend gold to buy an item. You normally don’t buy something with a share of an Apple. Generally, you first convert them into fiat currency. That’s why we are striving to bring a fiat currency onto the blockchain which can be utilized as an effective exchange medium for payments. Moreover, there is a network of trust which surrounds this coin.”

What are StableCoins?

Stablecoins are cryptocurrencies that are backed with a 1 to 1 ratio of fiat currencies. The underlying concept behind a stablecoin is to offset the drastic price fluctuations often seen by other cryptocurrencies in the hopes of having a USD equivalent asset trading on crypto exchanges.  In the case of Gemini Dollar, BPM will conduct the third-party financial audits to check that there is a 1:1 parity between U.S Dollar and Gemini Dollar accounts. Tether (USDT) was the first stablecoin to enter the market. The company partnered with large exchanges like Bitfinex and Bittrex to help the onboard USD onto exchanges that had a difficult time maintaining bank accounts with traditional banking institutions. Investors would purchase USDT tokens from the Tether company directly, then transfer the tokens onto exchanges to trade for other cryptocurrencies and in the process circumvent the obstacles that the government and banking institutions place on cryptocurrency companies. Hopefully Gemini operates with a little less controversy than Tether.

Crypto Is Coming!

Subscribe to our newsletter

Interested in other cool crypto content? Check out The Evolving Bitcoin OTC market and Game Changer: Binance and LCX Crypto Exchange Joint Venture.

Follow us on twitter @cryptoiscom