• The U.S. government recently announced plans to backstop all deposits at two failed banks, which inadvertently secured at least 8% of the collateral for the USDC stablecoin.
• Circle CEO Jeremy Allaire discussed emergency measures his company took and its plans to spread out cash and turn stablecoins into „straight-through government obligation money.“
• BitMEX co-founder Arthur Hayes proposed NakaDollar (NUSD), a stablecoin backed by bitcoin and bitcoin derivatives, which would be liquid and attractive to traders while providing stability if accepted and used by investors and crypto exchanges.
The Banking Crisis Has Been Good for Stablecoin Experimentation
Sovryn, a Bitcoin DeFi protocol, announced a new dollar proxy as others look at alternative models for collateralizing stablecoins amid a banking system crisis.
U.S Government Backs Stablecoins
When the U.S Treasury Department, Federal Reserve and FDIC announced plans to backstop all deposits at two failed banks, they were also pledging to secure at least 8% of the collateral for the USDC stablecoin. Circle, the issuer of USDC, keeps around a quarter of its reserve assets at about six banks. Circle CEO Jeremy Allaire spoke about the emergency measures his company took in order to keep USDC pegged with the U.S dollar.
New Dollar Proxy Announced
Sovryn recently announced a new dollar proxy as an alternative model for collateralizing stablecoins during this banking system crisis. It is designed to be deeply liquid and attractive to traders while providing stability through being accepted and used by investors and crypto exchanges.
BitMEX co-founder Arthur Hayes proposed NakaDollar (NUSD), a stablecoin backed by bitcoin (BTC) and bitcoin derivatives that would theoretically provide liquidity while offering stability if accepted by investors and crypto exchanges alike.
Stablecoins are proving themselves useful in times of financial hardship due to their ability to distribute reserves among several different entities while still maintaining their value relative to fiat currency like USD or EURO when used correctly.. This has resulted in many proposals looking into other types of models for collateralizing these coins such as Sovryn’s new dollar proxy or BitMex’s NakaDollar proposal which seek more efficient ways of securing these tokens during times of economic instability