The stablecoin wars are heating up, with the latest entry from BitGo, the leading US digital asset custodian, through the launch of its new coin pegged to the US dollar on Wednesday.
Called USDS, the new stablecoin will focus on “fairness, transparency, and market neutrality.” USDS is expected to launch in January 2025, with rewards promised to users.
The launch comes as BitGo attempts to compete with Coinbase, the largest cryptocurrency exchange in the United States, in developing new digital asset products.
Just last week, Coinbase introduced a Bitcoin “wrapped” Token called cbBTC – an asset pegged 1:1 to Bitcoin, capable of being used on Ethereum as well as Coinbase’s own Layer 2 network Base .
The move comes after BitGo, the custodian for WBTC — the most popular Bitcoin Token — announced a partnership with Hong Kong-based Bit Global to “diversify its custody and cold storage operations across multiple jurisdictions.” The partnership has been controversial due to crypto entrepreneur Justin Sun’s ties to Bit Global, the controversial founder of the TRON network.
BitGo is now looking to enter the competitive stablecoin market. Coinbase has played a key Vai in the development of USD Coin (USDC) – a popular stablecoin that allows investors to earn interest on their accounts at the leading exchange.
“The stablecoin market has long been dominated by investors who prioritize returns over the sustainability of the ecosystem,” BitGo said, noting that its new product will be backed by a combination of short-term T-bill securities, overnight repo agreements, and cash reserves, and will undergo independent audits from leading accounting firms.
In the context of the cryptocurrency market, stablecoins, which are pegged to stable assets such as the US dollar, play an important Vai in facilitating fast and efficient transactions without relying on traditional banks. However, they have also encountered many controversies related to transparency and stability.
Regulators are now actively monitoring the sector, especially after events such as the collapse of Terra and the algorithmic stablecoin UST. Tether , one of the largest stablecoins, is also facing criticism due to the lack of independent audits from reputable firms.
Competition in the stablecoin space is not only about technology and products, but also about trust and transparency, important factors in shaping the future of the cryptocurrency market.
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