Max E.Thu, Jan 13, 2022 7:10 PM
American Banks Launch "Alternative Stablecoin"
According to media reports, a group of US banks partnering with the Federal Deposit Insurance Corporation (FDIC), as well as other financial market players, have formed USDF Consortium to release a new stablecoin. Plans were announced to create a network of banks that will promote the future token.
What is the reason for this initiative? According to the creators of the consortium, the demand of many banking clients for the creation of blockchain solutions that will allow making payments in real-time is now increasing. However, to implement this plan – the transfer of value through the blockchain – it is necessary to create the appropriate conditions for such a transfer to meet regulatory requirements. To this end, the consortium intends to
Tackle the regulation of existing stablecoins, as well as consumer protection.
The new stablecoin will be backed by the US dollar at a one-to-one ratio. It can be exchanged for traditional currencies at any bank owned by the consortium. The stablecoin will be released on the Provenance blockchain. The coin is intended to become an alternative to non-bank stablecoins. At the moment, USDT from Tether and USDC from Circle are considered the largest stablecoins in terms of capitalization.
Use cases for the new stablecoin include supply chain financing, fundraising requests, interbank and peer-to-peer payments. The consortium intends to increase the number of participants in the future – to attract other banks insured by the Federal Deposit Insurance Corporation.
So far, the group that has taken the initiative to create a banking stablecoin has included venture capital firm JAM Fintop and fintech company Figure Technologies, as well as Synovus Bank, Sterling National Bank, FirstBank, NBH Bank and New York Community Bank.
Earlier, the head of the Fed, Jerome Powell, said that privately issued stablecoins could coexist with a digital dollar, the launch of which is not excluded, he said. Today the US Federal Reserve has stepped up efforts to create a digital version of the dollar (CBDC). The regulator made this decision due to the fact that China has already presented its token pegged to the yuan in test mode.
However, there are politicians in the American leadership who speak out against the Fed adhering to the same model as the People's Bank of China. Congressman Tom Emmer, representing Minnesota, tweeted that the United States should not follow the path of "digital authoritarianism" that China is following. To that end, the Fed should not be allowed to be given the right to single-handedly retail the digital dollar.
The corresponding policy bill is submitted to Congress members for consideration.
According to Emmer, the digital dollar should be an open instrument. There can be no question of any censorship. This tool should develop as freely as possible, only in this case
the United States will develop innovatively and retain the status of a state with a democratic financial system, the politician said.
It is known that the working group on financial markets under the American president advocates the regulation of stablecoins: they are confused by the opacity of collateral reserves and, accordingly, the possible insufficient financial provision of stablecoins.
In this regard, the US authorities are planning to limit the list of companies that are entitled to issue their own stablecoins. The group proposes to allow only insured depository institutions to issue stablecoins.