The Winklevoss brothers took to Medium on Monday, September 10, to announce that New York State regulators have a given approval for the launch of their own stablecoin.
The brothers, who co-founded cryptocurrency trading platform Gemini, now enjoy the support of the New York Department of Financial Services (NYDFS). In their Medium post, they described the stablecoin, dubbed the “Gemini Dollar,” saying:
“The U.S dollars that correspond to the Gemini dollars issued and in circulation will be held at a bank located in the United States and eligible for FDIC “pass-through” deposit insurance, subject to applicable limitations. In addition, the U.S dollar deposit balance will be examined monthly by an independent registered public accounting firm to verify the 1:1 peg. “
Bringing A Stablecoin To Life
The launch of the crypto asset is a first for the brothers, whose bid to launch a Bitcoin ETF met with a second rejection from the United States Securities and Exchange Commision last July.
“It’s not just Gemini Trust,” says Gemini’s CEO and Co-Founder Tyler Winklevoss. “But you have to build a network of important players that are also trusted to solve for the trust problem of a stablecoin.”
Trading of the Gemini Dollar started on September 10, with Tyler Winklevoss telling Forbes in an interview that they hope to solve any issues caused by time delays between 24/7 crypto markets and time-restricted fiat ones.
Stablecoins are designed in a way to offset some of the concerns investors have about the volatility of traditional cryptocurrencies. Stablecoins, however, do have their own set of issues.
Most traditional cryptocurrencies are created via a mining process that also audits the record of transactions stored on the blockchain. Stablecoins are created when the fiat currency the stablecoin is tied to is deposited into an account.
Boston-based firm State Street will be in charge of accepting cash deposits for a cryptocurrency firm. Third-party audits on the Gemini account will be carried out each month by BPM Audit to ensure that there is a US Dollar for every Gemini Dollar in circulation.
The approval of the NYDFS makes the Gemini Dollar the world’s very first regulated stablecoin to launch, the brothers claim, although Paxos also makes the same claim about their own stablecoin, also approved on Monday.
NYDFS superintendent Maria T. Vullo commented on the approval, telling Forbes in an interview that:
“These approvals demonstrate that companies can create change and strong standards of compliance within a strong state regulatory framework.”
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