By Hannah Lang
(Reuters) – A consortium of financial technology and cryptocurrency companies including Robinhood (HOOD), Kraken (PNG.V) and Galaxy Digital (GLXY.TO) on Monday launched a joint stablecoin pegged to the U.S. dollar.
The goal of the newly formed Global Dollar Network is to accelerate the adoption of stablecoins worldwide and promote an asset that provides commensurate economic benefits to its partners, the companies said.
Stablecoins are digital tokens designed to maintain a constant value. They are backed by traditional currencies such as the US dollar or the euro.
As cryptocurrencies like bitcoin have risen in value this year thanks to predictions for lower U.S. interest rates and the introduction of new crypto exchange-traded products, more companies have devoted resources to promoting stablecoins.
Stablecoins are often used to convert crypto tokens into traditional currencies, as they are protected from the wild price swings seen with other cryptocurrencies.
The Global Dollar Network is based on a new stablecoin called USDG, which will be issued from Singapore by crypto platform Paxos. The token will be managed by a committee made up of representatives from the network’s partners, which also include Anchorage Digital, Bullish and Nuvei.
According to data from CoinGecko, USDG will face the uphill task of moving into a concentrated market where the two largest players – Tether and USD Coin – account for almost 90% of the total market capitalization.
The move by the companies involved comes as crypto players largely anticipate U.S. officials pouring into digital assets regardless of who wins Tuesday’s presidential election.
“Global Dollar Network will return virtually all rewards to participants and is open to anyone to join. It is designed to drive the global use of stablecoins and accelerate social adoption of this technology,” said Charles Cascarilla, CEO of Paxos .
(Reporting by Hannah Lang in New York; Editing by Alison Williams)
