According to a Reserve report titled, The State of Stablecoins 2019: Hype vs. Reality in the Race for Stable, Global, Digital Money and published in Q1 2019, the cryptocurrency startup is of the opinion that stablecoins will be crucial for mainstream adoption. Designed to act as a safe haven and a conduit into a volatile and regulated market, stablecoins shields investors from the otherwise damaging volatility that is so common in the space.
Of the many out there, investors are well aware of Tether Limited’s Tether, USDT. However, given the controversy made worse by their opaque operations, the sphere is about to change now that OkEx is conducting polls in Twitter asking their followers of their two cents in matters stablecoins.
Star Xu’s Partnership with Prime Trust
Sources now speculate that OkEx could support an Ethereum based, ERC-20 compliant stablecoin, USDk issued by Ok Group. Like most stablecoins, it will be backed 1:1 by fiat held by Prime Trust. Early this year, Star Xu, the founder of OkCoin and OkEx announced their partnership that will see Ok Group work closely with Prime Trust in an “in-depth collaboration and offering diverse, secure and regulatory compliant services.”
OkEx Stablecoin Array
If anything, OkEx is accelerating their support for stablecoins as they understand their importance. In Q4 2018, OkEx listed four different stablecoins including TrueUSD, Paxos, USDCoin and Gemini dollar. This wide array of stablecoins will be beneficial for traders who at the time of wild volatility can move their funds to a safe haven without the need of converting them to fiat currencies like the Yen or the USD for example. Besides, it was a timely move coming at a time when the space was in doubt with iFinex’s operations.
The Problem with Tether (USDT)
The firm is behind Tether Limited and BitFinex, the cryptocurrency exchange that recently concluded a rather successful IEO at the back of accusation of fraud from the New York Office of the Attorney General (NYAG). Although they have since scored a temporary win over the insistent and stringent NYAG office, that cannot prevent the community from doubting the amount of USD in reserve.
This is after one of their lawyers admitted in a New York Supreme Court script that the amount of funds securing all USDT in circulation stood at 74 percent, not 100 percent as initially believed. Worse still, it emerged that the issuer, Tether Limited was investing in Bitcoin and other crypto asset against the official claim that USDT is backed by “cash and other cash equivalents” in their home page.
Even so, many investors prefer the stablecoin as there are no KYC and AML rules unlike other “regulated” coins as GUSD for example which is transparent and within the grip of the NYAG as it is operated by Winklevoss’s Gemini which is based in New York.