Tyler and Cameron Winklevoss have received NY state approval for the launch of the Gemini Dollar, a U.S. dollar-backed cryptocurrency.
The impact that cryptocurrency is having on the financial world, not to mention broadening a person’s economic opportunities, is staggering. Yet the promise of using cryptocurrency as an everyday means of exchange has proven elusive. The volatility of crypto has led many merchants to avoid them, and the increase in value, especially for Bitcoin, has encouraged people to hold them for long-term investments. The Winklevoss twins hope to fulfill the original goal of virtual currency by launching their Gemini Dollar, a stablecoin backed by the U.S. dollar.
Winklevoss Twins Get State Approval
The New York Department of Financial Services (NYDFS) has given the green light to the new cryptocurrency by the Winklevoss brothers. The token, based upon the Ethereum blockchain, has now officially launched from the Gemini Trust Company.
The Gemini Dollar is pegged to the U.S. dollar on a one-to-one ratio. For every Gemini Dollar in existence, a U.S. dollar will be held in an FDIC-insured account by State Street, an investing powerhouse.
The fact that a major financial institution is housing the account that backs up the new stablecoin is part of what the Winklevoss twins call the “network of trust.” It is this network that they say separates the Gemini Dollar from other stablecoins. As Tyler Winklevoss says:
It’s not just Gemini Trust, but you have to build a network of important players that are also trusted to solve for the trust problem of a stablecoin.
This “network of trust” is further strengthened by the fact a monthly third-party audit will be carried out by BPM Audit. This monthly check will ensure that there is a U.S. dollar held for every Gemini Dollar.
Gemini Dollar Not Alone
However, the Winklevoss twins are not the only ones to get NYDFS approval for a stablecoin. Paxos, the company behind the itBit cryptocurrency exchange, also received permission for their U.S. dollar-backed Paxos Standard cryptocurrency, which is also based upon the Ethereum blockchain.
Maria T. Vullo, the superintendent of the NYDFS, says:
These approvals demonstrate that companies can create change and strong standards of compliance within a strong state regulatory framework.
A major benefit of these stablecoins is that they can be used 24/7 in the business world, unlike fiat, which is only available during normal business hours. Tyler Winklevoss notes:
If there’s a price dislocation in a certain market and it’s a Friday night, traders can’t move fiat currency until Monday. [The Gemini Dollar links] the 24-7/365 nature of cryptocurrency and blockchain with the fiat world.
Chad Cascarilla, Paxos Chief Executive, agrees, saying:
Being able to move payments 24 hours a day, seven days a week and make payments programmable in a dynamic way is still very difficult [with fiat].
This is a tremendous development. The launch of a new cryptocurrency that is backed by heavy institutional hitters will help increase acceptance and adoption. While not as sexy as hoping Bitcoin will reach $20,000 or higher in value, the regulatory approval of these two new stablecoins increases the legitimacy of cryptocurrency.
Do you plan on using the Gemini Dollar? Let us know in the comments below.
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