Gemini Launched its Stablecoin this Week and Here’s What You Should Know

September 14, 2018 / by Jackson Rickun

On September 10, Gemini announced the release of a new stable value coin pegged to the U.S. dollar. In a Medium press release, Gemini said that its stablecoin, called the Gemini dollar, (GUSD) is the first trusted and regulated cryptocurrency token of its kind. And in the wake of concerns over Tether and its nebulous guarantees of audits and proper backing, the release of GUSD is an important milestone in cryptoasset adoption.

The Gemini dollar is built atop the Ethereum network in accordance with ERC20 standards for tokenization. Only Gemini users will be able to buy GUSD, but once a user pays, he or she is free to send GUSD to any supported wallet or exchange.

Only as users pay with dollars can GUSD be released into the crypto ecosystem. Ensuring that GUSD is pegged 1:1 to USD, an independent public accounting firm will verify that balances are legitimate. Each report will be available for anyone to view here each month.

“The U.S. dollars that correspond to the Gemini dollars issued and in circulation will be held at a bank located in the United States and eligible for FDIC ‘pass-through’ deposit insurance, subject to applicable limitations,” the press released said.

Some say, because of its integration with the U.S. financial system, GUSD is antithetical to the spirit of cryptocurrency by virtue of regulation. But it’s likely most traders won’t be holding GUSD as a store of value. Rather, they will use it for short-medium term trades back into cryptoassets.

GUSD’s impact will materialize through adding, for the first time, a trusted medium for cryptoasset arbitrage. Through using GUSD as a 1:1 proxy for USD, traders will benefit most by being able to hedge against volatility in crypto markets.

While many exchanges have yet to announce support, yesterday Bibox announced it will be the first exchange to make GUSD tradable. Major exchanges such as BitMEX, Huobi, and Bitfinex have not announced any future support for the token.