Stablecoin USDG Launches to Transform Cryptocurrency Landscape

A consortium of financial technology and cryptocurrency companies including Robinhood, Kraken, and Galaxy Digital on Monday introduced a joint stablecoin pegged to the U.S. dollar. The aim of the newly formed Global Dollar Network is to accelerate usage of stablecoins worldwide and promote an asset that provides proportionate economic benefits to its partners, the companies said.

WHY IT’S IMPORTANT

• Stablecoins are digital tokens designed to keep a constant value, being backed by traditional currencies such as the U.S. dollar or euro.
• As cryptocurrencies like Bitcoin have rocketed in value this year, more companies have devoted resources to promoting stablecoins.
• Stablecoins are often used for converting crypto tokens into traditional currencies, shielding users from price fluctuations seen in other cryptocurrencies.

CONTEXT

The Global Dollar Network is based around a new stablecoin called USDG, which will be issued out of Singapore by the crypto platform Paxos. The token will be governed by a committee made of representatives from the network’s partners, which also include Anchorage Digital, Bullish, and Nuvei.

USDG will face the uphill task of elbowing into a concentrated market where the two biggest players - Tether and USD Coin - account for nearly 90% of the total market capitalization, according to data from CoinGecko. The move from the firms involved comes as crypto players largely anticipate U.S. officials warming to digital assets, regardless of who wins the presidential election on Tuesday.