The New York–based digital currency exchange Gemini Trust Co. announced Monday it had launched its own stablecoin.
The Gemini dollar, which will be pegged to the U.S. dollar at 1:1, is set to become the world’s first regulated stablecoin and seeks to allow users to send and receive U.S. dollars on the ethereum network, using ERC20 tokens. “The Gemini dollar—the world’s first regulated stablecoin —combines the creditworthiness and price stability of the U.S. dollar with blockchain technology and the oversight of U.S. regulators, namely the New York Department of Financial Services (NYDFS),” wrote Gemini in a blog post.
In an interview with MarketWatch late August, Tyler Winklevoss, co-founder and CEO of Gemini Trust, said the company had been thinking about the launch of a stablecoin for more than a year, adding that it’s been a lengthy process marked by a lot of due diligence and in-person meetings.
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.”
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In a press release, New York DFS Superintendent Maria T. Vullo said: “As the financial technology marketplace continues to evolve, New York is committed to fostering innovation while ensuring responsible growth. 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.”
The DFS added that it has established conditions to ensure the trust company maintains standards regarding anti-money laundering, anti-fraud, and consumer protection measures.
The U.S. dollars will be held by State Street Bank STT, +0.98% , and the balance would be audited on a monthly basis by BPM Accounting and Consulting—an essential feature as pressure mounts on Tether, the world’s most famous stablecoin, which has yet to satisfy many market participants that it is 100% backed by U.S. dollars.
“We wanted to create a network of trust around the stablecoin,” said Winklevoss. “All three [Gemini, State Street and BPM] have regulatory oversight.”
The news comes a month after the Securities and Exchange Commission rejected a bid by Tyler Winklevoss and his twin brother, Cameron Winklevoss, for a bitcoin-backed exchange-traded fund.
Gemini Trust Co. is a digital asset exchange and custodian that allows customers to buy, sell and store a number of cryptocurrencies.
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