A number of US banks have formed a group to offer their own fully regulated stablecoins to address consumer protection and stablecoin regulation concerns. The USDF Consortium is an association of insured financial institutions of the Federal Deposit Insurance Corporation (FDIC), which launched on January 12.
According to the announcement, founding members of the consortium include New York Community Bank (NYCB), NBH Bank, FirstBank, Sterling National Bank and Synovus Bank. The group also includes several fintech companies that will facilitate the promotion and adoption of the new stablecoin.
Stablecoins bank coins
USDF are stablecoin coins minted by banks to compete with or dominate existing privately issued stablecoin coins such as Tether (USDT) and USDC Circle.
The new stablecoin will be created exclusively by US banks and will be redeemable at a 1:1 ratio for cash from member banks. The aim is to offer what the consortium has called “greater consumer protection” over unregulated stablecoin coins.
USDF will run on the public Provenance Blockchain, a corporate share verification network launched in May 2021 by the Provenance Foundation, a company based in San Francisco, California.
Figure Technologies CEO Mike Cagney spoke of potential use cases for decentralised finance, commenting, “The USDF opens up endless possibilities for the growing world of DeFi transactions.”
Andrew Kaplan, Chief Digital and Banking as a Service Officer at NYCB, added:
“As a form of digital currency created and administered by regulated US banks as part of a consortium, the USDF will enable widespread use of a real-time payments chain that meets important principles of safety and soundness, compliance with anti-money laundering and financial stability standards.”
The announcement did not say how many stablecoins will be created in the initial batch or when they will be made available to users, who will have to follow KYC/AML procedures before they can open a wallet.
Late last year, a number of anti-crypto-currency senators attacked stablecoins, claiming they posed a threat to the US economy.
Prospects for the ecosystem
According to CoinGecko, there is currently $170 billion in stablecoins in circulation, with a 24-hour trading volume of around $60 billion. This currently represents about 7.8% of the total cryptocurrency market capitalisation.
Tether is still the dominant stablecoin with $78.5 billion USDT in circulation. This gives Tether an overall market share of 46%, a number that is gradually decreasing.
The second largest stablecoin with a circulating supply of 44 billion is USDC, which has a market share of 26%. Binance USD (BUSD) is in third place with 14 billion tokens and a stablecoin market share of 8.3%. According to CoinGecko, Terra USD (UST) is in fourth place with a current supply of 10.5 billion, closely followed by the DAI token with 9 billion in supply.
15/01/2022 – Mr.Advice NEWS