New York regulators have given the Winklevoss twins the green light to launch their stablecoin. This development is widely regarded as a major step in the industry as it will facilitate the entry of new capital into the ecosystem.
Starting Monday, September 10, 2018 users will be able to convert U.S. dollars in their Gemini account into Gemini dollars (GUSD) and withdraw them to any Ethereum address specified by the user.
GUSD will benefit from FDIC deposit insurance, although indirectly. Users can also convert the GUSD to USD by depositing them in their Gemini account.
Gemini Dollar to be pegged 1:1 against the U.S Dollars
According to a blog post by Gemini, the Gemini dollar has been pegged 1:1 against the U.S Dollar and will become the world’s first regulated stablecoin.
The stablecoin will make it possible for users to both send and receive U.S. dollars on the ethereum network, using ERC20 tokens.
Just last month, Tyler Winklevoss, co-founder, and CEO of Gemini Trust spoke in an interview about the long road to releasing his product, and the drive for the company to do everything by the book.
During the interview, the Winklevoss twins revealed that Gemini has been planning the launch of their stablecoin for several months now.
He added that it wouldn’t be just Gemini trust, a network of important players that are trusted need to be available in order to provide the stability part of the stablecoin.
Approval was granted by the New York Department of Financial Services (NYDFS). Superintendent Maria T. Vullo of the NYDFS commented that New York is committed to supporting innovation as the FinTech sector continues to grow.
The NYDFS added that it has set some conditions that would ensure that the trust company enforces rigorous Know Your Customer standards to prevent money laundering and fraud, and consumer protection measures.
Gemini promises that the U.S. dollars will be held by State Street. BPM Accounting and Consulting has been appointed to balance and audit the account every month.
Gemini, in its blog post, added that the GUSD has been designed to combine the creditworthiness and price stability of the U.S. dollar with blockchain technology. The regulators keeping watch will ensure that things are done properly.
Paxos also gets the green light
Gemini Trust wasn’t the only company to get the green light from the authorities. Paxos has also received a nod from the NYDFS to launch their stablecoin pegged 1:1 to the U.S. dollar.
Paxos, the parent company of over-the-counter (OTC) exchange itBit has also issued its stablecoin, Paxos Standard (PAX).
Paxos will make it possible for users to purchase and redeem tokens directly through Paxos.com. The company added that investors using their itBit exchange or OTC desk can redeem their crypto holdings for Paxos Standard instantly.
The firm added that it will work with a third-party, independent public accounting firm every month to review and ensure that PAX tokens are fully backed by actual US Dollars.
NYFDS confirmed that both Gemini Trust and Paxos will be subject to charter revocation in case they fail to comply with the provisions given to them by the agency.
The controversy surrounding Tether’s USDT coin has called the credibility of stablecoins into question after allegations surfaced that the USDT are not totally backed by the U.S Dollars puts additional pressure on Gemini trust and Paxos to perform transparently.