Potential Launch of Stablecoins by Revolut and Robinhood This Year
This year, prominent fintech companies Revolut and Robinhood are considering the launch of their own stablecoins. Both organizations seem to be inspired by the recent introduction of PayPal’s stablecoin, PYUSD, which made its debut in 2023.
Revolut and Robinhood: Exploring Stablecoin Opportunities 💰
As reported by Bloomberg, these fintech entities are in discussions about the feasibility of developing their native stablecoins. A representative from Robinhood Markets Inc. commented that while there are “no imminent plans” for producing a stablecoin, the company has not dismissed the concept entirely.
Similar sentiments are echoed by Revolut, which is also contemplating entering this burgeoning market. Despite these being merely speculative assertions at this point, it appears that the UK-based platform is keen to establish its foothold in the cryptocurrency landscape. A spokesperson for Revolut mentioned that they aim to “further grow” their range of crypto offerings, though they have not yet confirmed any details regarding a stablecoin.
The rumor mill surrounding the potential issuance of stablecoins by these two fintech giants isn’t entirely surprising. They would be following in the footsteps of industry leader PayPal, which released its stablecoin PYUSD in August 2023.
Revolut and Robinhood: Challenging Tether’s Dominance? 🚀
There seems to be a competitive edge fueling the motives of Revolut and Robinhood in considering the issuance of their own stablecoins. According to Bloomberg’s analysis, this interest might be partly driven by the challenges facing Tether, the company behind the world’s largest stablecoin, USDT.
New regulatory frameworks, particularly the forthcoming MiCA regulations, might pose significant hurdles for Tether. The CEO of Tether, Paolo Ardoino, has openly criticized certain components of these regulations, particularly those mandating that stablecoin issuers maintain reserves in bank accounts.
This regulation suggests that stablecoin issuers must hold 60% of their reserves in bank deposits, which Ardoino fears could increase the risks associated with stablecoin operations. Currently, while Circle’s USD Coin (USDC) holds the necessary licenses to operate within the European Union, Tether lacks the requisite permissions. Failure to secure these could result in the delisting of USDT from European exchanges.
As of now, Tether dominates the stablecoin market with a market cap reaching approximately $119 billion, while USDC follows with a market cap of around $36 billion. With this context in mind, Robinhood and Revolut might be biding their time to assess market dynamics, particularly if Tether’s position were to be challenged.
Introducing the New USD Standard (USDS) by BitGo 💡
On a related note, BitGo recently introduced a novel stablecoin titled the USD Standard (USDS), set to launch for the public in January 2025. Unlike the strategies of companies that are focused on regulatory compliance with Tether, BitGo is attempting to innovate within the market.
The USDS will be pegged to the US dollar at a 1:1 ratio and will include incentives for institutions that contribute to its liquidity. It aims to differentiate itself by implementing a rewards mechanism for liquidity providers while maintaining its stablecoin status.
The backing for USDS will consist of short-term Treasury securities, repurchase agreements, overnight funds, and cash—a method akin to many other stablecoins in circulation. However, USDS aims to share a portion of the earnings generated from these reserves.
The methodology utilized to share returns ensures that it does not classify as a dividend, thus avoiding being labeled as an investment contract. Notably, the rewards distribution mechanism will exclusively involve institutional participants, meaning end users will not directly benefit from this revenue-sharing model.
In conclusion, the developments involving Revolut, Robinhood, and BitGo signify a dynamic shift in the stablecoin arena. As these firms navigate regulatory landscapes and market strategies, it will be intriguing to watch how their initiatives unfold in the coming months.
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