In a statement on Monday, the New York state regulator revealed that it had approved two dollar-linked digital tokens, including one launched by the Winklevoss brothers.
Two firms, Gemini Trust Company, and the Paxos Trust Company, are the first stablecoin providers to receive the go-ahead to list on exchanges in New York State.
A stablecoin is a cryptocurrency pegged against the USD, giving it price-stable characteristics, seen by some as a safe hedge against the volatility of conventional cryptocurrencies such as Bitcoin or Ethereum. Currently, they are underutilized apart from traders using them to guard their positions during bear markets.
New York State’s Superintendent of Financial Services Mario Vullo commented on the Gemini/Paxos decision:
“These approvals demonstrate that companies can create change and strong standards of compliance within a strong state regulatory framework that safeguards regulated entities and protects consumers.”
The Gemini Dollar, launched by the Winklevoss twins, will allow users a one to one exchange on the US dollar on the Ethereum blockchain. On Monday, they commented on the approval, suggesting that their thinking behind Gemini was a “first step… making it safe and easy to buy, sell, and store cryptocurrencies”. They saw the launch of Gemini four years ago as a “mission” to “build a bridge to the future of money”.
In exactly the same way as the Gemini, the company’s stablecoin, Paxos Standard, will also be linked to the US dollar on a one to one basis.
Nick Tomaino founder of @1confirmation calls stablecoins “the holy grail of cryptocurrency“, suggesting that coins such as Bitcoin were too prone to volatility. Tomaino suggests that the US dollar is a fiat working example of stability. The dollar falls down as a stablecoin, primarily because it lacks user control being dependent on the Federal Reserve and the US banking system.
Investors trading through the itBit exchange will able to cash out their crypto to Paxos Standard, which will trade as PAX on other exchanges.
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