It's a busy week for believers of stablecoins.
Carbon launched on Wednesday the third stablecoin making its debut this week — joining Gemini dollar and Paxos. On Sept. 10, Gemini and Paxos were approved by New York State Department of Financial Services (NYDFS) as regulated stablecoins, a move widely-hailed by fintech enthusiasts.
CarbonUSD runs on Ethereum blockchain. Carbon chief marketing officer David Segura says the firm's digital coin is a "compliant, price-stable cryptocurrency that is one-to-one backed with [U.S. dollar]." He adds our "whitepaper details a novel mechanism for transitioning to a hybrid fiat-algorithmic stablecoin model once CarbonUSD reaches sufficient scale as a fully fiat-backed token," in a Sept. 12 announcement.
The digital coin is aimed towards financial professionals and institutions. It became available on Wednesday for institutional accounts, hedge funds, traders and exchanges. The New York-based company is trying to get CarbonUSD listed on exchanges and hopes to announce its first trading pair soon. Segura said that once listed, the token "will serve as a low-friction fiat on-and-off ramp and trusted hedging asset for traders on exchanges."
Give Fiat To Partner Bank
How can you get it?
Users who want to obtain CarbonUSD tokens can make fiat deposits with Nevada-based Prime Trust which acts as a partner bank. Cohen & Co. will periodically audit that each token is backed 1-to-1 by escrowed funds in a trust account. Carbon anticipates several benefits of their stablecoin, including borderless and low-fee payments, as well as, compatibility with smart contracts and distributed applications.
Segura says that CarbonUSD may even serve as alternative, reliable money in developing economies. That's a polite way of saying that many countries in emerging markets have messed up financial systems, as well as, lack banking infrastructure — and it'd be an accurate depiction. Venezuela (652%) and South Sudan (182%) had some of the highest inflation last year, according to World Bank, where people's purchasing power can evaporate in days.
Related: Bitcoin Is Most Useful In These Countries
On Monday, this column stated "Turkey and Argentina have seen their local currencies nosedive over the past few months, and it’s problematic that both countries have large U.S. dollar-denominated debt. In such cases, the amount you have to pay back — in dollars — increases as the value of your local currency plummets. The Turkish Lira has lost 44% against the U.S. dollar; Argentine Peso, -50%; Angolan Kwanza, -48%; Brazilian Real, -20%; Liberian Dollar, -18%; Iranian Rial, -14%; Indian Rupee, -10%."
So what's the vision for CarbonUSD?
"In the long term, we anticipate CarbonUSD will be composed of a basket of whitelisted stablecoin tokens, including a trust-minimized, algorithmic stablecoin," said Sam Trautwein, CEO of Carbon. "Starting off with full fiat-collateralization is essential for bootstrapping the market’s trust in CarbonUSD in a way that is not dependent on the size of an initial reserve."
On Monday, the Winklevoss twins’ Gemini Trust Company rolled out Gemini dollar
, a regulated stablecoin that runs on Ethereum network. It maintains an equal value with U.S. dollar. On the same day, Paxos launched the PAX coin
. PAX is fully backed by dollars held at U.S.-based FDIC-insured banks and transactions occur on the Ethereum network.
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Disclaimer: The views expressed in this article belong solely to the author. Information contained herein should not be construed as investment advice.