Figure Technologies Inc. Seeks SEC Approval for Interest-Bearing Stablecoins
Blockchain and lending startup Figure Technologies, led by former SoFi CEO Mike Cagney, is seeking approval from the U.S. Securities and Exchange Commission (SEC) to launch interest-bearing stablecoins. This move aims to establish a new category of stablecoins that are regulated as securities in the U.S. Figure filed a draft registration statement with the SEC in October under its subsidiary, Figure Certificate Co.
If approved, Figure will offer stablecoins known as “face-amount certificates,” which are fixed-income securities utilizing blockchain technology. These stablecoins will be available to both retail and institutional investors in the United States.
Unique Features of Figure’s Stablecoins
Unlike traditional stablecoins pegged at $1, Figure’s stablecoins have a unique twist. Each certificate is redeemable at 1 cent, requiring the transfer of 100 certificates for a $1 payment. The interest on these stablecoins will accrue daily and be distributed monthly to holders.
The interest will come from reserves consisting of various assets such as treasury holdings, commercial paper, and corporate debt. To acquire these interest-bearing stablecoins, users must complete a know-your-customer (KYC) process during the sign-up procedure.
Potential Impact and Regulatory Landscape
Figure believes its offering will serve as an alternative to current stablecoins in payments and transaction settlements. It aims to attract buyers with an instrument that offers yield supported by highly liquid, investment-grade assets. The company also highlights the ability for buyers to hold these assets digitally and quickly liquidate them in peer-to-peer transactions.
The stablecoin market is currently dominated by Tether’s USDT and Circle Internet Financial’s USD Coin, which do not offer interest. Figure’s application for approval is expected to spark discussions on how stablecoins should be regulated in the U.S. President Joe Biden has prioritized oversight of the sector, and Circle is also part of this regulatory landscape.
Figure is also submitting a filing to register an offering called Figure Installment Certificates, designed for investment purposes. This offering targets investors seeking to earn yields while holding digital assets.
Hot Take: Figure’s Interest-Bearing Stablecoins Could Revolutionize the Stablecoin Market
The introduction of interest-bearing stablecoins by Figure Technologies has the potential to revolutionize the stablecoin market. By offering a unique twist with daily accruing interest and monthly distributions, Figure aims to attract both retail and institutional investors. The use of highly liquid, investment-grade assets as reserves adds an additional layer of security and stability.
If approved by the SEC, Figure’s interest-bearing stablecoins could challenge the dominance of existing stablecoins like Tether and USD Coin. This move also highlights the increasing focus on regulatory oversight in the cryptocurrency industry, with President Joe Biden prioritizing regulation of stablecoins.
Overall, Figure’s innovative approach to stablecoins and its pursuit of SEC approval signal a potential shift in the future of digital currencies.
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