Cryptocurrency startup Carbon has reportedly launched a new USD-pegged stablecoin called CarbonUSD, that’s set to be “compliant.” It’s initially available to traders, institutional investors, hedge funds, and exchanges.
According to CoinDesk, Carbon revealed through a press release that it’s looking to get the cryptocurrency listed on exchanges, presumably to help it challenge the dominance of Tether’s controversial stablecoin USDT.
When it reaches a $1 billion market cap, the news outlet noted, Carbon is set to “transition to a hybrid algorithmic model” Speaking to the source Miles Albert, Carbon’s co-founder, revealed the algorithm has been tested and will be implemented once the coin has sufficient scale and liquidity.
Regarding the reputation stablecoins have in the crypto community and how hard it may be to establish trust given Tether’s controversies, Albert noted CarbonUSD was designed to be “as compliant as possible,” and that it’ll “undergo frequent third-party attestation to verify that each token is one-to-one backed [by USD].”
Investors looking to purchase CarbonUSD will reportedly have to deposit fiat currency with Prime Trust, a blockchain-driven company that helps ensure the “legal side” of the project has been worked out.
Notably, analysts on social media have pointed out the stablecoin isn’t yet going to be backed by USD 1:1, but has promised to be at a later date.
Sigh. It’s not pegged. It promises to become pegged at a later date “after scale.” As with all “algorithmic” stablecoins, they need new buyers for the scheme to succeed. No convertibility, no parity.
Gemini and Paxos’ offerings are still superior. https://t.co/oBUqanwftY
— Preston Byrne (@prestonjbyrne) September 12, 2018
The startup’s move comes shortly after the Winklevoss twins’ Geminin exchange launched a dollar-backed stablecoin called Gemini Dollar (GUSD), regulated by the New York State Department of Financial Services, issued by the Gemini Trust Company.
New York-based blockchain startup Paxos also launched the Paxos Standard (PAX), another fully USD-collateralized stablecoin issued by the Paxos Trust Company, approved and regulated by the New York State Department of Financial Services. Just like the GUSD, PAX is based on ethereum.
Both stablecoins are fully collateralized 1:1 by the US dollar, with their reserves being held in FDIC-insured bank accounts. As covered, Gemini’s USD balances are audited monthly by BPM, one of the largest California-based accounting and consulting firms in the US, while Paxos’ monthly audits are carried out by Withum, a nationally ranked top 25 auditing firm.
The sudden growth in stablecoins saw social media users call this a “stablecoin invasion.” Crypto finance Circle, which acquired Poloniex for $400 million this year, has also revealed it’s set to launch a USD-backed stablecoin called USDC. Other stablecoins competing with Tether’s USDT include True USD (TUSD), which has been adopted by Binance, Bittrex, and Cryptopia.