Circle Jumps on the Crypto Stablecoin Bandwagon

Activity among cryptocurrency startups is ramping up. Most recently, Jeremy Allaire’s Circle is jumping on the stablecoin bandwagon, with plans to unveil a new cryptocurrency that’s tied to the value of the U.S. dollar, Bloomberg reports. The new crypto will be dubbed USD Coin (USDC), transactions for which including bank deposits and fiat-to-crypto conversions will occur on a separate platform dubbed Centre. Incidentally, Centre is a consortium that will eventually be spun-off and whose members include crypto mining giant Bitmain, which just publicly filed financial statements in anticipation of an IPO.

Allaire told Bloomberg:

“Market infrastructure like stablecoins will become the base layer that supports every financial application. It has to be legitimate, trustworthy, built on open standards. We are solving a lot of these fundamental problems that exist. That’s a huge difference from something like Tether, and we think the market will very quickly gravitate to that.”

Source: Circle

So far, the market is gravitating to rival stablecoin Gemini Dollar, which the Winklevoss twins unveiled in early September. According to Bloomberg, Gemini has issued nearly $400,000 in its stablecoin, while the Paxos Standard, which was approved on the same day, has seen $13 million in demand. While USDC has already launched on Circle-owned Poloniex, the stablecoin will also be widely available to trade on Asia-based platforms across OKCoin, KuCoin, Digifinex and Huobi in addition to several wallets including U.S.-based Coinbase’s product.

Tether, whose market cap recently surpassed $2.8 billion, is a controversial stablecoin that based on research was recently vindicated from accusations that it was being used to manipulate the bitcoin price. The research suggests USDT supply influences trading volumes, not price.

Demand for Stability

Demand for stablecoins has been on the rise as investors hunt new options in response to the market volatility and this year’s plunge in prices. The coins are designed to provide investors with greater transparency, which is something that Tether has lacked amid its refusal to undergo an audit. A trust company will hold the USD backing Gemini’s stablecoin, and Circle’s Centre will govern the issuance of stablecoins on the platform, including monthly audits to ensure the reserves backing the cryptocurrency are sufficient.

Source: Circle

Meanwhile, the heightened stablecoin activity is unfolding against the backdrop of a strengthening cryptocurrency market. The combined market value is perched back above $218 billion led largely by altcoins, including double-digit gains in XRP and Bitcoin Cash. Coinbase announced a change in its listing process that will see more coins listed in the U.S., and all eyes are currently on XRP.

Featured image courtesy of Shutterstock.

Gerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.