Four Major Cryptocurrency Exchanges Lead Funding Round in New Stable Coin
Four of the largest global cryptocurrency exchanges are leading an investment round in a new e-commerce-based stable coin. The investments come as stable coins become the most popular projects in the cryptocurrency industry.
The $32 million fundraising round in stable coin Terra, was led by Binance Labs, OKEx, Huobi Capital, and Upbit’s parent company Dunamu. Terra, the latest stable coin to receive major corporate backing, is headed by the founder and president of TicketMonster, Daniel Shin.
Notably, the Terra investment round is the first one to receive backing by competing exchanges, and also includes investments by other, major, investment groups, including Polychain Capital, FBG Capital, Hashed, Kenetic Capital, 1kx, and Arrington XRP.
Stable Coins Continue to Gain Popularity Amidst Tether Concerns
Following the tremendous volatility the cryptocurrency markets saw beginning in late 2017 and well into 2018, people began turning to stable coins to avoid the daily market volatility and even to profit from price swings. The most popular of these coins is Tether, although this coin is shrouded in controversy, which has led to the rapid rise in competing alternatives.
The main concern surrounding Tether is the creation of coins, which some argue can be used to artificially manipulate the markets, printing more coins when the market is down even if Tether doesn’t have the matching funds in its reserve.
Cryptocurrency investors were incredibly concerned towards the beginning of 2018 that Tether would be found to have less cash than they have Tethers, which would have caused major problems for the markets. These concerns have largely subsided, but an abundance of competing stable coins have arisen in the time since.
One such stable coin that has been adopted by U.S.-based exchange, Bittrex, is TrueUSD (TUSD), which is fully compliant with global regulations as it requires all users to complete strict KYC/AML procedures. Also, TUSD publish regular attestation reports from Cohen & Co. to prove that all TUSD in circulation are in fact backed by USD.
Rafael Cosman, the CEO of TrueUSD’s parent company, TrustToken, explained TUSD’s backing, saying:
“Every TrueUSD is always fully collateralized by U.S. Dollars and held in a professional trust company’s escrow account… Our smart contracts, which undergo public attestations, mint TrueUSD when U.S. dollars clear the escrow accounts. We then burn TrueUSD when U.S. dollars are redeemed to ensure a 1:1 parity between the TrueUSD in circulation and U.S. dollars in the escrow accounts.”
Another notable stable coin that has received backing from mining giant Bitmain is Goldman Sachs-backed Circle’s USDC stable coin. This stable coin is meant to be a digital USD alternative that offers all the benefits of cryptocurrency, like speed, security, etc. all while offering stability that traditional cryptocurrencies lack. Circle CEO, Jeremy Allaire, spoke about USDC, saying:
“It’s a version of fiat that can move at the speed of the Internet with global reach, with much less cost, with high levels of security. It’s a huge improvement for how fiat money transmission can work around the world for consumers and for businesses who might want to collect digital payment with tokens.”
Stable coins are rapidly becoming the next big thing in the crypto markets, although due to their lack of volatility, only the companies investing in the seed rounds can profit from them. Notably, stable coins have been raising hundreds of millions of dollars from major companies, making them one of the most popular investment prospects in crypto.
Featured image from Shutterstock.
The post Four Major Cryptocurrency Exchanges Lead Funding Round in New Stable Coin appeared first on NewsBTC.