Stablecoin Yuga Backed by Government Debt Receives US Patent
Till now, many stablecoins have been tied to fiat or even less risky assets like gold! For perhaps the first time, a stablecoin pegged to government debt such as treasury yields and bonds will be commercially available. Two co-founders of Puerto Rico-based digital FV Bank announced that they have obtained a US patent for producing stablecoins guaranteed by sovereign debt. The stablecoin is described as a “tokenized crypto pegged to government debt” in a patent filing made with the USPTO in 2020.
Nitin Agrawal and Miles Paschini are named as the creators of the stablecoin, christened Yuga, in the patent filing. On Tuesday, July 20, Agrawal said, “We intend to build numerous stablecoins based on various currencies that are supported by government, in addition to being Know-Your-Customer (KYC), anti-money laundering, and Financial Action Task Force (FATF) pliant.”
Users are able to exchange the Yuga coin for any equivalent central bank issued fiat currency in a 1:1 ratio. Additionally, every one of these Yuga coins will be backed by the individual country’s national treasury assets. The Yuga Coin will be denominated in either US Dollars or Euros at debut. The yuga stablecoin will be listed on a regulated network, lowering the uncertainties of dealing with specific counterparties.
Yuga Coin’s creators are certain that it is more reliable than other fiat-pegged options currently available. They contend that the Yuga currency will not be dependent on a single bank in terms of collateral choice. “The stability of the tokenized crypto is dependable on the reliability of government debt,” as per the patent document.
In contrast to the fiat-pegged stablecoin market, which appears to be highly congested, Yuga Coin is creating a fresh business model in the sector. At this time, there isn’t much of a market for a stablecoin tied to government debt. Stablecoins supported by banks, according to Agrawal, keep all money in government assets and have no partial reserves. However, with Yuga currency, they intend to entirely abolish the need for banks.
The latest effort occurs at a time when US officials are considering imposing tight regulations on stablecoins. Security and privacy issues have been expressed by US legislators over the usage of stablecoins in the country’s banking system. Janet Yellen, the US Treasury Secretary, stressed the need for urgent actions on Monday.
Chairman of the Federal Reserve, Jerome Powell, has recently expressed identical fears. Yuga Coin, according to Agrawal, will integrate regulatory-endorsed identity verification requirements. It will also include key metrics comparable to those used in conventional banks, such as FICO credit scores.
The Yuga coin will be verified by a regulated and reputable organization, according to the creator. The debt-backed stablecoin will also have a variety of uses. This comprises dealings between governments, intergovernmental transfers, worldwide B2B and B2C activities, and a store of value.
“By utilizing blockchain, this will be the only solution to make stablecoins truly government-friendly, fostering creativity in banking, remittances, finance, financial markets, and asset registration system,” Agarwal added. “Crypto is an answer to all anti-money laundering concerns throughout the world, and our initiative demonstrates how to do so.”