THE STATE OF NEW YORK

APPROVED LAUNCH OF TWO STABLE CRIPTOMONEDS REGULATED BY THE STATE OF NEW YORK

The Department of Financial Services of the State of New York (NYDFS) authorized the issuance of two new regulated stable cryptocurrencies, linked to the US dollar.

Through an information document published on September 10 on its website, the regulatory body notes that the superintendent, Maria T. Vullo, authorized Gemini Trust Company and Paxos Trust Company to each offer a stablecoin, setting the required conditions to ensure that each company maintains sound policies and procedures to address risks and apply the standards and regulations of the State of New York.

The document also states that the authorizations granted follow an exhaustive and rigorous review of both applications and are subject to important regulatory conditions, being subjected to examinations and inspection, and even revocation, in order to guarantee the protection of the markets and consumers.

On this, the co-founder and CEO of Paxos, Charles Cascarilla, expressed that they will offer a stable, fast, exchangeable, audited and regulated token, with a one to one (1: 1) parity with the dollar. In that sense, the new stable cryptocurrency, PAX, will be structured as an Ethereum ERC20 token and will be supported by physical dollars held in bank accounts insured by the Federal Deposit Insurance Corporation (FDIC), an independent agency whose mission is to guarantee to the clients the recovery of the money in case a bank breaks.

BROTHERS WINKLEVOSS PROPOSE STABLECOIN

As of the approval granted by the NYDFS, the Gemini exchange house, created by the brothers Tyler and Cameron Winklevoss, today announced the launch of its regulated stablecoin, Gemini Dollar (GUSD), explaining that - like PAX - it will have a parity 1: 1 with the dollar and is built on the Ethereum network.

The note adds that as of this date registered users in Gemini will be able to change dollars to GUSD and then transfer them to an Ethereum address. They will also be able to convert the new cryptoactive into dollars to deposit them in their exchange house accounts. It is said that the GUSDs are created at the time of withdrawal and then "destroyed" when they are deposited on the Gemini platform.

It is also pointed out that the stable cryptocurrency is backed by dollars deposited in a bank in the United States and the transfers also have an insurance from the FDIC. The balance of the deposit in dollars will be examined monthly by a firm of public accountants, in order to verify the parity 1: 1, allowing the public access to such accounting reports. In that sense, it is exposed that the intelligent contracts underlying the Gemini Dollar have also been audited and verified by an independent security company.

In this way, it is intended to offer the public a stable cryptocurrency that combines the creditworthiness and price stability of the dollar with the technological advantages of a cryptocurrency and the supervision of regulators, according to the source, highlighting the differences between Gemini Dollar and other stablecoin.

This search for differentiation can respond to the questions that exist about stable cryptoactives, such as Tether, which has been surrounded by controversy since its departure, generating suspicions of manipulation by the Bitfinex exchange house due to the rapid increase in its capitalization and doubts about the entity that keeps its reserves in dollars.

OPERATION OF THE NEW CRYPTOACTIVE

In this regard, the white paper of the new cryptocurrency indicates that the core components of Gemini Dollar are three smart contracts identified as Proxy, Impl and Store.

The system includes a contract custody mechanism for certain high-risk actions, which seeks approval offline through custodians. Therefore, to run, each intelligent contract involved must look for a custodian for approval, which can be another smart contract or a set of keys (online or off).

The document concludes that with all these implementations the new regulated stable cryptocurrency can serve as a means of exchange and unit of account for centralized and decentralized applications.