New York state approved Gemini Trust Company’s and Paxos Trust Company’s dollar-linked digital currencies, the first stablecoins to get the nod from the region’s regulator.
The Gemini dollar by Gemini, the digital asset exchange launched by twins Cameron and Tyler Winklevoss, is a stablecoin that will allow users to send and receive U.S. dollars on the Ethereum blockchain. It will be strictly pegged to the U.S. dollar on a one-to-one basis.
Paxos’ stablecoin, the Paxos Standard, will also be fully collateralized by the U.S. dollar on a one-to-one basis.
“These approvals demonstrate that companies can create change and strong standards of compliance within a strong state regulatory framework that safeguards regulated entities and protects consumers,” New York state Department of Fianancial Services Superintendent Maria Vullo said.Both coins are available on their respective exchanges.
One of the drawbacks of cryptocurrencies – digital tokens that use encryption techniques to secure transactions – is price volatility, which hinders means of payments or medium of exchange.
The stablecoin – any digital currency pegged to a stable asset, such as gold or the dollar – serves as a hedge against the volatility.