A consortium of financial technology and cryptocurrency firms, including Robinhood, Kraken, and Galaxy Digital, announced the launch of a new stablecoin pegged to the U.S. dollar on Monday. This initiative, known as the Global Dollar Network, aims to enhance the global usage of stablecoins while providing proportional economic benefits to its partners.
Importance of Stablecoins
Stablecoins are digital tokens designed to maintain a stable value, typically backed by traditional currencies like the U.S. dollar or euro. With the recent surge in cryptocurrency values, driven by expectations of lower U.S. interest rates and the launch of new crypto exchange-traded products, many companies are increasingly focusing on promoting stablecoins.
These digital assets serve as a bridge for converting cryptocurrencies into traditional currencies, offering protection against the significant price volatility that often affects other cryptocurrencies.
Overview of the Global Dollar Network
The Global Dollar Network will introduce a new stablecoin named USDG, which will be issued from Singapore by the crypto platform Paxos. The governance of USDG will be overseen by a committee comprising representatives from the consortium’s partners, which also include Anchorage Digital, Bullish, and Nuvei.
However, USDG will face considerable competition in a market dominated by two major players—Tether and USD Coin—who together control nearly 90% of the total market capitalization, according to data from CoinGecko.
The launch comes amid expectations among cryptocurrency stakeholders that U.S. regulators may become more receptive to digital assets, regardless of the outcome of Tuesday’s presidential election.
“Global Dollar Network will return virtually all rewards to participants and is open for anyone to join. It is designed to incentivize global stablecoin usage and accelerate widespread adoption of this technology,” said Paxos CEO Charles Cascarilla.
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