Highlights:
- BitGo plans to launch USDS, a dollar-backed stablecoin, in January 2025.
- USDS will reward institutions that contribute liquidity, distinguishing itself from existing stablecoins.
- BitGo aims to set a new standard with $10 billion in assets within a year.
Crypto custody firm BitGo plans to launch a unique kind of dollar-backed stablecoin called USDS in January 2025. Unveiled at the Token2049 conference in Singapore, BitGo’s stablecoin will differentiate itself by rewarding institutions that contribute liquidity to its network, offering a unique approach in the competitive stablecoin market.
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BitGo claims it will be the first “open-participation” stablecoin, inviting institutions to contribute to the network’s growth and share in its success. Ahead of his Token2049 keynote, BitGo CEO Mike Belshe hinted to CoinDesk at the motivation for launching USDS. He noted that while existing stablecoins fulfill important functions, there is potential to develop something more open and fair. The innovation with USDS, he suggested, lies in its ability to reward those who contribute to expanding the network.
What Sets USDS Apart from Traditional Stablecoins?
According to the announcement, Bitgo’s new 1:1 USD-backed stablecoin is entirely supported by short-duration T-bills, overnight repos, and cash, ensuring high liquidity and minimal risk. Additionally, the stablecoin will provide real-time proof-of-reserves on its website and undergo monthly audits by leading accounting firms.
BitGo noted:
“USDS is accessible to a global audience, including institutions, individuals, and DeFi platforms. Eligible participants, such as institutional exchanges and liquidity providers, can register with BitGo to start earning rewards.”
This move would mark a major change in the stablecoin market, where issuers have been earning substantial profits. According to TokenTerminal, the top two issuers, Tether and Circle, make approximately $525 million in monthly profits. Together, they dominate about 90% of the $170 billion stablecoin industry.
What's the TAM? pic.twitter.com/EB8pnPDCf4
— Token Terminal | @ TOKEN2049 🇸🇬📊 (@tokenterminal) September 17, 2024
Regulatory Strategy and Future Plans for the Stablecoin Market
BitGo is adopting a careful compliance strategy and planning to list USDS on all major exchanges with strong regulatory support. With a goal of reaching $10 billion in assets within a year of launch, the company aims to set a new standard for transparency and involvement. Additionally, BitGo is advancing Bitcoin utility through its innovative Bitcoin Staking Platform. This platform will enable users to stake BTC directly from secure, multi-sig cold storage wallets that are both regulated and insured.
To further enhance its global presence, BitGo has obtained a Major Payment Institution License from the Monetary Authority of Singapore, allowing it to offer fully regulated custody and trading services.
BitGo is pleased to announce that we have obtained the Major Payment Institution Licence from the Monetary Authority of Singapore.
We are committed to meeting the rising demands of client needs in Asia through regulated digital payment token services. This includes our… pic.twitter.com/4DAgKvLVVD
— BitGo (@BitGo) August 8, 2024
In the stablecoin market, other competitors are also making significant strides. Recently, Circle revealed the launch of USDC on the Sui network. This development follows their announcement of plans to support bridged USDC on Sony’s Ethereum layer 2 blockchain, Soneium.
Growing Institutional Interest in Stablecoins
BitGo’s action underscores the increasing institutional interest in stablecoins. In the past year, major financial players such as PayPal and Ripple have entered this fast-growing sector. Stablecoins provide a practical, real-world use for crypto, offering a stable alternative to volatile assets like Bitcoin.
Venture capitalist Nic Carter highlighted a recent Castle Island Ventures report, noting:
“[Stablecoin] are being used not just for crypto trading, but increasingly feature in the ordinary economic lives of these individuals. Saving in dollars was the 2nd most popular goal of users overall, and the #1 goal in Nigeria.”
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