In June of 2019, Facebook grabbed global headlines by officially confirming the development of their Libra cryptocurrency. One of Libra’s most distinctive features was how it would be valued, backing the project with a “basket” of major world currencies to keep the token’s price relatively stable. This idea isn’t new, with established “stablecoins” such as Tether and USD Coin currently dominating their own niche in the greater crypto market.
Due to their flat trading value and reliance on third-party management, stablecoins like Libra have limited appeal to many cryptocurrency investors. For risk-averse institutions and corporations, however, stablecoins offer many of cryptocurrency’s advantages — near-instant, low-friction transactions, for instance — without the dangers of major price fluctuations.
For these massive financial firms and companies, institutional-level stablecoins are an idea whose time has come. While Libra may have been the first stablecoin to attract wider public attention, it’s just one of many such projects currently in the works. In this post, we’ll be taking a look at five new stablecoin initiatives that are supported by major financial players.
1. Walmart: In early August of 2019, news broke that retail giant Walmart had quietly filed a patent application earlier in the year for its own version of a blockchain-backed stablecoin pegged to the U.S. dollar. Informally dubbed “Walmart Coin” by early reports, the token would serve “low-income households that find banking expensive” and perhaps even allow holders to “earn interest” on their balances. It’s not clear if such a project is actually in the works at Walmart — major companies often file patent applications for strategic reasons —but it does show that the retailer is at least aware of the technology’s potential.
2. Arizona’s ALTA: Financial technology has become an intensely competitive field in recent years, prompting many national and state governments to create “FinTech sandboxes” where innovative startups can sidestep traditional regulatory requirements to fast track their ideas. In Arizona, one of the biggest challenges faced by the state’s medical marijuana dispensaries is access to banking services, as federal law forbids banks from working with the illegal drug trade. (Although its sale fully legalized in many states, marijuana is still illegal at the federal level.) ALTA seeks to provide banking services to this $350 million industry in Arizona through the creation of a U.S. dollar-pegged stablecoin, creating a kind of alternative financial system that isn’t constrained by federal rules. In August, ALTA became the seventh participant of the Arizona’s FinTech Sandbox.
3. JPMCoin: After years of antagonistic hyperbole about cryptocurrency from JPMorgan Chairman and CEO Jamie Dimon, the multinational investment bank and financial services company confirmed the existence of its experimental “JPMCoin” in early 2019. Pegged to the U.S. dollar, JPMCoin is the first such token created by a major financial institution. In June of 2019, JPMorgan further confirmed that it had begun trials of the new token with its corporate clients.
4. Goldman Sachs: Speaking with French news agency Les Echos in June, Goldman Sachs CEO David Solomon strongly suggested that his firm was working on a JPMCoin-like stablecoin of its own. Interestingly, Solomon also hinted that Goldman Sachs is just one of many firms considering the technology. When asked about the future of cryptocurrency in the banking industry, Solomon told the publication to “assume that all major financial institutions around the world are looking at the potential of tokenization, stablecoins and frictionless payments.”
5. Binance GBP: As the biggest cryptocurrency exchange in the world (by volume), it’s not exactly shocking that Binance has invested heavily in the creation of stablecoins. Their first major stablecoin project, pegged to the British pound sterling (GBP), is known simply as Binance GBP (BGBP). The token began trading on a limited scale in July of 2019, and is the first of several such stablecoins Binance currently has in development.