There has been an explosion of stablecoins (or cryptocurrencies that trade at parity with fi♐at currencies) in the cryptocurrency ecosystem in the last month. Now a new alliance backed by two of the biggest players in the ecosystem plans to connect the stablecoins with fiat currencies. North America’s largest cryptocurrency exchange Coinbase and Goldman Sachs-backed fintech company Circle announced the consortium today to “speed up” adoption of stablecoins backed by fiat currencies.  

In a , Circle’s co-founders said that their vision was that of an “open global financial system 𒁃built on crypto rails and blockchain infrastructure.” This vision, according to them, “requires industry leaders to collaborat🤡e to build interoperable protocols and standards.” 

Problems With The Current Stablecoin Ecosystem 

Stablecoins are expected to fulfill the promise of bitcoin as a medium for daily transaction. Typically, they are backed by fiat currencies, such as the US dollar, iꦐn a bank account. This strategy enables quick redemption in case of volatility and reassures investors about the stability of cryptocurrency markets. 

But such coins have come under a cloud of suspicion this year after reports surfaced that Tether, the most famous example of such a stablecoin, may not 澳洲幸运5开奖号码历史查询:have sufficient dollars backing its tradingꦓ volume. The stablecoin, which shares the same management company as well-known cryptocurrency exchange Bitfinex, has failed to provide evidence of its reserves and refused to submit to a comprehensive public audit. The recent breaking of its peg to the US dollar and subsequent vol꧒atility in the prices of stablecoins across exchanges have further multiplied investor fears about stablecoins. 

Circle, which bought cryptocurrency exchange Poloniex earlier this year, also has a stablecoin called USD Coin (USDC). Like Tether, it is backed by the US dollar and will begin trading on Coinbase as of today. “We sꩲee USDC as a major step towards a more open financial system. The advantage of a blockchain-based digital dollar – like USDC – is that it is easier to program, send, use in apps, and store locally than traditional US dolla🅺rs,” Coinbase . Unlike Tether, however, USDC will be regulated and has promised to submit itself to public audits.

The stablecoin’s price jumped slightly before returning to stability during the recent decline in stablecoin prices. (But that might also be due to the fact that trading volumes for the coin are fairly low since it began trading on𝐆ly on Oct 8). 

CENTRE’s fix to problems in the current ecosystem is to have stablecoins that adhere to a uniform approach that is compliant with existing regulations. For example, members of its consortium should have Anti-Money Laundering (AML) a✤nd Know Your Customer (KYC) practices in place and will have to submit to regular public audits for their reserves. The idea is to have an ecosystem that eases the flow of stablecoins between smart contracts, thereby making daily transactions possible between different con🌜tracts. To that end, interoperable standards and protocols will help developers integrate CENTRE into their respective stablecoins.

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