New Crop of ‘Regulated’ Stablecoins are Trading at a Premium to Tether

[MaluWang]

The next wave of USD-backed stablecoins have begun to make their way onto high-volume cryptocurrency exchanges, and early indications suggest that traders may trust them more than tether (USDT).

New USD-Backed Cryptocurrencies Vie for Tether’s Crown.

As CCN reported, cryptocurrency firms Gemini, Paxos, and Circle have all in recent weeks launched asset-backed “stablecoins,” cryptocurrency tokens whose values are pegged to the U.S. dollar with physical assets stored in company-controlled bank accounts.

All of these firms have received regulatory authorization to operate in New York, whose Department of Financial Services (NYDFS) overseas what many consider to be the strictest cryptocurrency regulatory framework in the United States. Gemini and Paxos have each received NYDFS charters, while Circle has received the state’s coveted “BitLicense.”

Each of these stablecoins, the Gemini Dollar (GUSD), Paxos Standard (PAX), and USD Coin (USDC), looks to unseat Tether’s USDT as the fiat-pegged token of choice in the cryptocurrency markets. Tether, at present, is the eighth-largest cryptocurrency with a $2.8 billion market cap. With $2.3 billion in daily trading volume, it is also the second most liquid cryptocurrency, trailing only bitcoin.

Among other things, all three issuers touted that their tokens will be regulated financial instruments, invoking an unstated comparison to tether, whose issuer has reportedly received a subpoena from U.S. regulators and whose operations have largely been shrouded in secrecy.

Tether has also faced allegations of fractional-reserve banking and cryptocurrency market manipulation, and while an investigation conducted by a respected U.S. legal firm — at Tether’s expense — indicated that the firm’s issued tokens were fully-backed by USD, the company has yet to undergo a full-scale audit. The issuers of GUSD, PAX, and USDC, on the other hand, have contracted with accounting firms to audit their stablecoin balance sheets regularly.

Now, as these new tokens begin to achieve liquidity on cryptocurrency exchanges, it appears as though the controversy surrounding tether — which heretofore has been the primary USD proxy on exchanges not authorized to list physical fiat currencies — is causing USDT to trade at a discount to its more intensely-regulated counterparts.

Read more, https://www.ccn.com/new-crop-of-regulated-stablecoins-are-trading-at-a-premium-to-tether/