NEW YORK (Reuters) - New York state on Monday approved Gemini Trust Company’s and Paxos Trust Company’s dollar-linked digital currencies, the first stablecoins to get the nod from the region’s regulator.
The Gemini dollar by Gemini, the digital asset exchange launched by twins Cameron and Tyler Winklevoss, is a stablecoin that will allow users to send and receive U.S. dollars on the Ethereum blockchain. It will be strictly pegged to the U.S. dollar on a one-to-one basis.
Paxos’ stablecoin, the Paxos Standard, will also be fully collateralized by the U.S. dollar on a one-to-one basis.
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“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,” New York state Department of Fianancial Services Superintendent Maria Vullo said in a statement on Monday.
Both coins are available on their respective exchanges on Monday.
One of the drawbacks of cryptocurrencies - digital tokens that use encryption techniques to secure transactions - is price volatility, which hinders means of payments or medium of exchange.
The stablecoin - any digital currency pegged to a stable asset, such as gold or the dollar - serves as a hedge against the volatility.
FILE PHOTO: Entrepeneurs Tyler and Cameron Winklevoss arrive at the Metropolitan Museum of Art Costume Institute Gala (Met Gala) in New York on May 2, 2016. REUTERS/Lucas Jackson/File Photo
“When we founded Gemini over four years ago, our mission was simple: build a bridge to the future of money,” the Winklevoss twins wrote in a blog on Monday. “As a first step, this meant making it safe and easy to buy, sell, and store cryptocurrencies.”
While cryptocurrencies operate 24 hours a day, fiat currencies only operate during specific business hours, they noted. So far, they said, there has been no trusted and regulated digital representation of the dollar that moves in an open, decentralized manner like cryptocurrencies.
“Being able to move payments 24 hours a day, seven days a week and make payments programmable in a dynamic way is still very difficult,” Paxos Chief Executive Chad Cascarilla said in an interview with Reuters.
Gemini said the U.S dollars that correspond to the Gemini dollars issued and in circulation will be held at a U.S. bank and eligible for the Federal Deposit Insurance Corporation’s “pass-through” deposit insurance.
This type of insurance covers the interests of owners or beneficiaries in a qualified fiduciary or custodial account.
In Paxos’ case, customers can purchase and redeem tokens directly through Paxos.com one to one with the dollar.
Investors who trade digital assets through the itBit exchange or its over the counter desk will also have the option to cash out their digital assets to Paxos Standard instantaneously, Cascarilla said.
Paxos Standard will also be available for listing on other exchanges and will trade under the ticker symbol PAX.
FILE PHOTO: Cameron Winklevoss (L) and Tyler Winklevoss pose as they arrive at the world premiere of the film "Ocean's 8" at Alice Tully Hall in New York City, New York, U.S., June 5, 2018. REUTERS/Mike Segar/File Photo
Reporting by Gertrude Chavez-Dreyfuss; Editing by Susan Thomas
NEW YORK (Reuters) - San Francisco technology start-up Chain Inc. has been acquired by Lightyear Corp., a company focused on the Stellar blockchain, Chain Chief Executive officer Adam Ludwin said on Monday.
Interstellar, the new company, will migrate Chain’s customer base and products onto Stellar’s global public ledger, creating a platform that will enable organizations to issue, exchange and manage assets, Ludwin said in an interview with Reuters.
“We were looking for a way to help our customers move the projects that we have been working on from a private network to a public one,” Ludwin said.
“When we started a few years ago, our customers were not ready for a public network. Fast forward to three years, they’re willingness has gone up, and the maturity of the public networks has changed a lot,” he added.
Blockchain is a distributed ledger used to underpin cryptocurrencies.
Ludwin declined to disclose financial details of the acquisition, but said Chain investors were cashed out. The transaction closed last week in negotiations that started late last year. “The deal turned out to be a very good outcome for our investors,” said Ludwin.
Chain was one of the bigger players in the blockchain space with customers in the financial services industry, while Stellar is an open network that allows any currency or asset to be digitally issued, transferred, and exchanged over the internet.
IBM recently announced that it is launching a payment network based on the Stellar blockchain.
Chain, a blockchain infrastructure company that enables organizations to build better financial services from the ground up, raised more than $40 million from companies such as Visa, Citi Ventures, as well as Nasdaq.
Under the transaction, the Chain and Lightyear brands will be retired. Ludwin will be the new company’s CEO, while Jed McCaleb, co-founder of Stellar Development Foundation and Lightyear, will be the chief technology officer.
Interstellar will employ 60 people with headquarters in San Francisco and an office in New York City.
Interstellar’s product portfolio will also include StellarX, a recently announced marketplace for trading assets on Stellar. StellarX is currently in beta phase and will launch to the public soon.
Reporting by Gertrude Chavez-Dreyfuss; Editing by Dan Grebler
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