New York state’s Department of Financial Services on Monday approved Gemini Trust Company’s and Paxos Trust Company’s dollar-linked digital currencies to issue cryptocurrencies pegged to the U.S. dollar, creating more regulated and transparent competitors to Tether and other so-called stable coins.
The Gemini dollar, which will be pegged to the U.S. dollar at 1:1, is set to become the world’s first regulated stable coin and seeks to allow users to send and receive U.S. dollars on the Ethereum network, using ERC20 tokens.
The Gemini dollar by Gemini, the digital asset exchange launched by Cameron and Tyler Winklevoss four years ago combines the creditworthiness and price stability of the U.S. dollar with blockchain technology and the oversight of U.S.
Paxos’ stable coin, the Paxos Standard, will also be fully collateralized by the U.S. dollar on a one-to-one basis.
The two new coins will compete with Tether, Dai and other stable coins designed to track the value of the traditional currency they’re linked to.
Tether has grown to become one of the biggest cryptocurrencies, but is shrouded in concern it’s not actually backed by dollars as its creators claim.
Stablecoins are becoming increasingly popular with proponents of decentralized technology because they alleviate some of cryptocurrencies’ shortcomings, including trust and volatility.
“The Gemini dollar is part of our mission to build the future of money,” said Winklevoss. “It is the missing link between the traditional banking system and the crypto economy.”