NYC Finance Department Approves Two Stable Coins
September 11, 2018 12:07 pm
New York City has one of the strictest regulatory structure in all of the United States. The state has recently authorized two cryptocurrency providers to issue their crypto tokens. Both these currencies are pegged to the US dollar.
The New York Department of Financial Services (NYDFS) published a statement this past Monday. The release stated that Gemini Trust Company and Paxos Trust Company have been granted permission by NYDFS to issue stable coins to clients.
Stable coins are the type of cryptocurrencies whose value is pegged to an existing fiat currency such as the US dollar, Pound, Euro and more. This protects the users and investors from the volatility of the cryptocurrency market. It allows users a safe way to enter the crypto market.
Tether (USDT) is one of the most commonly used stable coins. It is frequently traded on crypto exchanges serving as a replacement for actual US dollar. This allows platforms which do not have authorization for fiat money transactions to hold USD on their client’s behalf.
Stable coins can greatly facilitate faster transaction times as a standard USD transaction can take three or more business days. Meanwhile, a cryptocurrency transaction can be executed in mere seconds.
There are critics of stable coins who have said that these tokens are used to manipulate the prices of Bitcoin and other cryptocurrencies. This can be used to carry out crimes such as money laundering. This is the reason that the NYDFS has only authorized these two cryptocurrencies.
Furthermore, both companies have assured the regulatory body that their tokens will be subjected to “effective risk-based controls and appropriate BSA/AML and OFAC controls to prevent the Gemini Dollar or Paxos Standard Token from being used in connection with money laundering or terrorist financing.”