Stablecoin Archives - 2100NEWS

UrbanFebruary 18, 2019

3min789

Japan’s stablecoin race has begun to hot up – with one of the biggest banks in the country and the world announcing it has struck a deal with Alipay, the financial arm of Chinese business giant Alibaba.

The Mizuho Financial Group, operator of Japan’s second largest (and one of the top 20 largest banks in the world) bank – Mizuho Bank – says it has developed a smartphone app that will allow customers to pay at a wide range of Japanese stores using its forthcoming J Coin token. The stablecoin is slated to be unveiled next month. Alipay, for its part, is said to be keen to increase the overseas reach of its services, and will soon allow customers to pay for goods in Japan via QR code-powered J Coin transactions.

Per Mainichi, the partnership has been developed to target Chinese tourists in particular, as Alipay has some 700 million Chinese users.

Mizuho’s stablecoin has already won the support of 60 domestic banks, and a Japanese financial expert says Mizuho wants to score an historic first with its token, to be pegged 1:1 with the Japanese yen.

Hiroyuki Yamamoto, a Tokyo-based banking consultant, told Cryptonews.com, “It looks like Mizuho is aiming to win the race to become the first Japanese megabank to get its stablecoin into circulation. By all accounts, the bank wants to ensure its tokens are accepted at all the major shopping hotspots popular with Chinese tourists.”

As previously reported, a number of other banks in Japan are also keen on launching their own stablecoins, including Mizuho’s closest rival, Mitsubishi UFJ Financial Group. Other major stablecoins also in the pipelines include a token from GMO Internet, operator of some of the country’s largest cryptocurrency-related businesses.

Meanwile, last week another banking giant, JPMorgan announced its plans to launch JPM Coin, the centralized digital token created by the company to instantly settle payments between institutional clients. The bank claims it doesn’t have plans to make JPM Coin, which is pegged 1:1 with US dollar, available to individuals at this stage.

Also, Juan Villaverde, leader of the Weiss Cryptocurrency Ratings team, in a recent opinion piece argued that stablecoins are not true cryptocurrencies.

“Stablecoins are simply digital assets acting as proxies for a particular fiat currency. That’s what makes them stable. But it also takes away any semblance of achieving the core mission of cryptocurrencies — to give the people a new form of money only they control,” he said.


UrbanDecember 13, 2018

3min513

Major United States-based stablecoin project Basis will shut down operations and return most of its funds to investors, crypto news outlet The Block reports today, Dec. 12.

Citing “multiple people with direct knowledge of the situation,” the reports states that the algorithmic stablecoin project is set to return the majority of the $133 million in funding it raised in a private placement in April. Basis’ investors include major names in venture capital, among them Bain Capital Ventures and Andreessen Horowitz.

The Block reports that the firm plans to communicate directly on the reported shutdown later Wednesday evening, again citing a source with “direct knowledge of the situation.”

In private correspondence with Cointelegraph today, Nevin Freeman, co-founder and CEO of competing stablecoin project Reserve, commented that the move is evidently due to regulatory concerns around one of Basis’ token types. Freeman stated that, as with other algorithmic stablecoins, Basis’ protocol implements a “secondary token,” in this case known as a “bond” token, which needs to be purchased in order for the primary token to keep its stable peg in place.

“In many cases, these secondary ‘share’ or ‘bond’ tokens are securities [under U.S. law],” Freeman told Cointelegraph, implying that the “regulatory headwinds” allegedly behind Basis’ decision to shut down come from the U.S. Securities and Exchange Commission (SEC). Freeman added:

“Since there is only a small set of people who can [legally] buy these ‘share’ or ‘bond’ [unregistered] security tokens, protocols based on this mechanism may be at risk — if nobody wants to buy these tokens when the stablecoin is trading below the pegged price, the peg will just stay broken.”

Freeman –– whose project also completed a funding round earlier this year, with backing from high profile investors including Peter Thiel, Coinbase and Distributed Global –– also noted that not all algorithmic stablecoins will “suffer the same fate,” continuing, “[d]esigns can even include ‘share’ tokens, so long as they aren’t the direct source of capital for purchasing stablecoins out of circulation.”

Basis did not respond to Cointelegraph’s requests for comments by press time.

Various models of stablecoins have surged in popularity this year, with major fiat-back coins gaining the spotlight in the past few months. In October, top crypto exchanges Huobi and OKEx both added four major fiat-backed stablecoins –– USD Coin (USDC), True USD (TUSD), Paxos (PAX) and the Gemini dollar (GUSD) –– to their platforms.

This week, research firm Diar published an analysis saying that the adoption of stablecoins is growing based on the increasing number of on-chain transactions. As per the study, the same four major stablecoins to date have broken the $5 billion mark in on-chain transactions within the three-month period.


UrbanDecember 5, 2018

6min322

Users of crypto exchange Bitfinex and its associated token-trading platform Ethfinex now have a total of six stablecoin options for trading on either platform.

Bitfinex Opens Platform to Tether Competitors

As Bitfinex writes, for years the only major option in stablecoins was Tether (USDT), and for quite a while Bitfinex was the only way to cash in your Tether successfully – you’d have to pay Bitfinex withdrawal fees, but they offered a 1:1 redemption which they recently revoked, spurring Tether to reinstate its own redemption program complete with a questionably high fee schedule.

“At Bitfinex and Ethfinex we are dedicated to providing a high quality, unbiased meeting place for every ecosystem and customer. We were the first to introduce alternative stablecoins onto our platform, including Dai (an Ethereum collateralised stablecoin), and now proudly introduce the following established stablecoins: USDC, True USD, Paxos, and Gemini USD. All stablecoins on Bitfinex and Ethfinex will be traded against USD.”

In addition to TetherUSDC, and Paxos Standard, which everyone seems to be integrating, both exchanges also offer Dai, a very different type of stablecoin built on Ethereum, as well as TrueUSD and Gemini Exchange’s GUSD. This last addition is notable in that Bitfinex is one of the first major exchanges other than Gemini to enable usage of it, likely leading to increased adoption of the Winklevoss Twins’ stablecoin entrant. We should also note that they offer EURT, the Euro version of Tether.

While in past times using USDT meant that you had a guaranteed 1:1 dollar ratio at Bitfinex, now they will have varying (albeit quite small) rates according to supply and demand. Seemingly microscopic arbitrage opportunities will thus be created across stablecoins and currencies. On occasion, one will be able to buy one of these stablecoins for less than the dollar it costs through its issuer, and sell it back for slightly more at a later date. This strategy isn’t really profitable for those with small portfolios, but large and institutional investors will recognize the potential, and the move by itself is likely to stimulate renewed volume at Bitfinex and Ethfinex.

The Era of the Stablecoin

tether price chart

The Stablecoin market is very new despite Tether having been around for several years, in that there are an increasing number of offerings which have most of the same properties. Paxos, Gemini, and USDC all offer free exchanges between the dollar and the token, which is important for those trying to gain traction in their crypto trading career.

It can be expected that just as hundreds upon hundreds of altcoins and later tokens came to market, there will be an increasing number of stablecoin offerings, especially as traditional finance goes more and more crypto. Exchanges like Bitfinex appear ready to support anything their customers might use, while others such as Binance appear more reluctant to add stablecoin tokens without significant demand.

What we have yet to see but expect to see is the advent of Asia-specific stablecoins for currencies like the Chinese Yuan and the Japanese Yen. Such additions will essentially enable crypto traders to have a global reach and the ability to get from one continent to another in terms of financial liquidity with less effort than ever before, which will enable new types of payment platforms that had not previously been possible, even with the existence of Bitcoin.



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