By CCN.com: Canadian cryptocurrency exchange Coinsquare has announced plans to launch a CAD-pegged stablecoin. To be known as the eCAD, the stablecoin will be exchanged for the Canadian dollar on a 1:1 basis.
The eCAD is expected to breathe life into Canada’s crypto markets and beyond according to Coinsquare’s CEO, Cole Diamond:
The launch of eCAD? will create the first transparent, affordable, and secure way of transferring value in Canada and beyond, without the risk of instability in the traditional cryptocurrency market.
What Reserves? Pitfalls for eCAD to Avoid
Coinsquare has claimed that for ‘every one eCAD? created, one Canadian dollar (CAD) will be held in reserve’. Though it is too early to tell whether this will be greeted with cynicism, Coinsquare can learn from the mistakes other stablecoins have made.
Specifically, Coinsquare should strive to build confidence in its stablecoin by exercising transparency from the earliest opportunity. Lack of transparency is an issue that has dogged the largest stablecoin by market cap, Tether (USDT), to its detriment.
Just last month Tether finally admitted that the USDT is not 100 percent backed by actual dollar reserves, according to Forbes. This was spotted in the fine print on its website. Initially, it said that “Every tether is always backed 1-to-1 by traditional currency held in our serves’.
But the text was changed last month to read ‘Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties…’
Stablecoin Adoptions Grows
The eCAD is coming at a time when the leading stablecoins among the top 100 cryptos by market cap are all pegged to the US dollar. Just like the U.S. dollar has dominated in world trade, USD-pegged stablecoins have taken over the crypto space. These stablecoins includes the USD Coin, Gemini Dollar, Paxos Standard, and TrueUSD.
Between September and November, the four stablecoins exceeded $5 billion in on-chain transactions demonstrating their growing adoption, according to cryptocurrency publication Diar.
Stablecoins pegged to other major currencies have also been launched. However, they have failed to gain as much traction as the USD-pegged ones.
A Welcome Break for a USD Stablecoin-dominated world
Earlier this month the blockchain firm behind TrueUSD, TrustToken, launched a stablecoin pegged to the British pound known as TrueGBP.
In a blog post, TrustToken revealed that TrueGBP would use similar technical and legal infrastructure as its USD-pegged stablecoin. TrueGBP has already been made available on major over-the-counter trading desks. It is, however, yet to be traded live on exchanges.
Two months ago, Japanese tech giant GMO Internet also revealed plans to unveil its own Yen-pegged stablecoin, GYEN, this year. Other stablecoins backed by other major currencies such as the Australian dollar have also been announced.
Last modified: March 4, 2021 2:44 PM