New York State Approves Two Dollar-Based Cryptocurrencies

Engadget, Swapna Krishna  |  Sept. 11, 2018

Engadget’s Swapna Krishna wrote:

[On September 10], New York approved the first digital currencies that are tied to the US dollar, called “stablecoins.” These cryptocurrencies avoid the price volatility of their brethren by being pegged to stable assets. The digital currencies in question, from Gemini Trust Company and Paxos Trust Company, are available to trade on their respective exchanges. It’s a good sign that cryptocurrency is maturing.

The Winklevoss twins, who rose to fame with a lawsuit suing Mark Zuckerberg for stealing the idea for Facebook from them, have become major players in the cryptocurrency world. They are behind Gemini Trust Company. The currency is pegged to the US dollar on a one-to-one basis; the company will hold US currency that corresponds with all issued Gemini dollars at a bank eligible for the FDIC’s pass through insurance.

The value of a cryptocurrency that is pegged to the dollar value is that regular, fiat currencies only operate during certain pre-set business hours. A stablecoin opens up fiat currency trading to all hours, regardless of when the currency is actually available for exchange. “To date, there has been no trusted and regulated digital representation of the U.S. dollar that moves in an open, decentralized manner like cryptocurrencies,” Cameron Winklevoss said in a blog post (emphasis in original). He goes on to call the Gemini dollar “the world’s first regulated stablecoin.”

New York State’s Department of Financial Services’ press release on the agency’s new virtual currency product approvals is available here.

Gemini Trust Company’s white paper, The Gemini Dollar: A Regulated Stable Value Coin, can be downloaded here.