USD- Collateralized Gemini Dollar Becomes The First Stable Coin Globally To Be Regulated
Gemini Dollar, the first cryptocurrency from early Bitcoin investors Cameron and Tyler, has received a green light from New York regulators and will be backed by State Street investment bank. The stable coin, which is pegged to the dollar on a 1 to 1 ratio, has received positive feedback with Charlie Shrem, founder of the Bitcoin foundation terming it a solid stable coin and a golden gate bridge for the cryptocurrency industry. According to him, the coin, whose value is tied to the dollar, will eliminate the risks associated the digital coin volatility and enable more individuals to get involved in the cryptocurrency industry. As a solid stable coin, Gemini will also help increase users participate in the market without having to buy any particular cryptocurrency.
The benefits of having a stable coin have been known and there have been other players in the industry whose focus has been on the development of such coins to provide more access to the masses. Despite being an exciting development, Shrem recommends vigilance noting that stable coins remain risky as less than optimal stable coins could cause more harm than good. Meltem, a strategist for CoinShares also noted the resemblance of the Gemini coin to the already existing Tether coin. She notes that there are other similar projects underway but that USD backed stable coins have no natural demand.
The Gemini Dollar operates on the Ethereum blockchain as an ERC-20 token and is currently valued at USD 30 million. Governments have shied away from regulating the cryptocurrency industry despite their continued rise in popularity and growing adoption rate. This has mainly been due to the risk factors associated with the digital currencies. Gemini however is the first digital coin to be regulated. Its advantages include price stability and creditworthiness drawn from the underlying US dollar coupled with the benefits of a decentralized system and oversight by the US regulators.
How Gemini Dollar works
Users wishing to withdraw Gemini dollars can simply do so by transferring their coins from their Gemini accounts to an Ethereum address. Once such a transaction has been initiated, Gemini creates Gemini dollars and debits the US dollar amount from the user’s account to the specified Ethereum address. Conversely, to make a deposit, users initiate a transfer of their Gemini dollars into the Gemini account. The Gemini platform will redeem the Gemini dollars and credit their dollar amount to the users account.
The Gemini dollar makes it possible to send and receive US dollars. Traders are also able to quickly move US dollars to buy cryptocurrencies. The stable coin will also facilitate exchanges allowing them to list US dollar trading pairs more conveniently. Developers and merchants can also receive US dollar payments through decentralized applications.