November 4 (Reuters) – A group of financial technology and cryptocurrency firms, including Robinhood (HOOD.O), Kraken, and Galaxy Digital (GLXY.TO), have introduced a joint stablecoin linked to the U.S. dollar.
The Global Dollar Network, the newly formed consortium, aims to expand the use of stablecoins globally and promote an asset that offers economic benefits to its partners.
The Significance of Stablecoins
Stablecoins are digital tokens designed to maintain a consistent value, typically backed by traditional currencies like the U.S. dollar or the euro. With cryptocurrencies like bitcoin experiencing significant value increases this year, driven in part by expectations of lower U.S. interest rates and the introduction of new crypto exchange-traded products, more companies are focusing on stablecoins.
These tokens are frequently used to convert cryptocurrencies into traditional currencies, as they are less susceptible to the price volatility of other cryptocurrencies.
Launch of USDG
The Global Dollar Network’s stablecoin, called USDG, will be issued out of Singapore by the crypto platform Paxos. A committee representing the network’s partners, including Anchorage Digital, Bullish, and Nuvei (NVEI.TO), will govern the token.
USDG will enter a concentrated market where the two leading stablecoins, Tether and USD Coin, account for nearly 90% of total market capitalization, according to CoinGecko data.
This move comes as cryptocurrency players generally anticipate a more favorable stance toward digital assets from U.S. officials.
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 Paxos CEO Charles Cascarilla.
Reporting by Hannah Lang in New York; Editing by Alison Williams
