November 4 (Reuters) – A group of financial technology and cryptocurrency companies, including Robinhood (HOOD.O), Kraken, and Galaxy Digital (GLXY.TO), have launched a joint stablecoin tied to the U.S. dollar.
The Global Dollar Network aims to boost the use of stablecoins worldwide, providing its partners with economic benefits, according to the companies.
Why It Matters
Stablecoins offer a way to keep a constant value. They are designed to maintain a steady price by being backed by assets like the U.S. dollar or the euro.
As cryptocurrencies like Bitcoin have seen significant price increases this year, driven in part by expectations of lower U.S. interest rates and the launch of new crypto-based exchange-traded products, more companies have focused on promoting stablecoins.
Stablecoins are commonly used to convert crypto tokens into traditional currencies, offering a hedge against the price volatility seen in other cryptocurrencies.
Context
The Global Dollar Network’s stablecoin, USDG, will be issued from Singapore by the crypto platform Paxos. A committee of representatives from the network’s partners, including Anchorage Digital, Bullish, and Nuvei (NVEI.TO), will govern the token.
USDG will face competition in a market dominated by Tether and USD Coin, which account for nearly 90% of the total market capitalization, according to CoinGecko.
The move comes as crypto industry participants generally anticipate a more welcoming stance toward digital assets from U.S. officials, regardless of the outcome of the upcoming presidential election.
Key Quote
“Global Dollar Network will return virtually all rewards to participants and is open for anyone to join. It is designed to incentivize global stablecoin usage and accelerate societal wide adoption of this technology,” said Charles Cascarilla, CEO of Paxos.
