Even while US officials are cracking down on stablecoin issuers, the asset class continues to draw market participants from all around the cryptocurrency ecosystem.
A recent proposal for a new stablecoin based on Bitcoin was made by, who was a co-founder & former CEO of the cryptocurrency exchange BitMEX.
Given how volatile Bitcoin is, this seems like a bit of an odd statement to make. On the other hand, Hayes asserts that the value of the stablecoin will invariably be anchored to the equivalent of one dollar in BTC.
In addition to this, there will be a reverse swap of Bitcoin for US dollars that will continue indefinitely.
Hayes presented the concept of the possible Satoshi Nakamoto Dollar (NUSD), also known as the NakaDollar, in a recent blog post that he wrote and titled (1) “Dust on Crust.”
The NakaDollar will operate very differently from USD-pegged stablecoins like USDT and USDC.
The NUSD stablecoin that has been proposed will not be dependent on any USD reserves. Hayes explained that the sole reliance would be placed on derivatives exchanges that provide a listing for liquid inverse perpetual swaps.
This means that the NUSD stablecoin will be built on a collection of short bets in Bitcoin as well as USD inverse perpetual swaps.
As a result, it will keep the 1:1 peg through the mathematical transactions that take place between the newly established decentralized autonomous organization (DAO) known as NakaDAO, the permitted players, and the derivatives exchange.
Away from Reliance on Dollar Financial Institutions Stablecoin
According to the founder of the BitMEX exchange, Arthur Hayes, the process of creating the NakaDollar stablecoin will be independent of any other movements of USD and will not require any services from financial institutions.
The recent failure of Silvergate Bank has prompted US regulators to request that banks exercise heightened caution when conducting business with cryptocurrency companies.
In addition to this, issuers of stablecoins will be subjected to a higher level of inspection. Yet, because of its one-of-a-kind structure, the NakaDollar (NUSD) stablecoin might sidestep having to interact with the governing bodies. On the other hand, Arthur Hayes has explained why the NUSD stablecoin would not be decentralized.
He went on to say that the centralized crypto derivatives markets would be the solution’s “points of failure.
“I did not take into account decentralized derivative exchanges as they do not have anywhere near the same level of liquidity as their centralized equivalents”.
Hayes isn’t the only one to propose an alternative stablecoin that is not pegged to the USD in light of the increasing pressure from regulators.
Binance’s founder, Changpeng Zhao, predicted that the cryptocurrency industry would transition toward using other fiat currencies as the backbone for stablecoins, such as the yen, euro, or Singapore dollar.
It is interesting to note that the Commodities and Futures Trade Commission (CFTC) has recommended classifying stablecoins as commodities and bringing them under their purview as a result.