Weekly Blockchain Industry Report-22nd Issue: GUSD, the world’s first regulated stablecoin

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OK Research

8 min readSep 19, 2018

(September 8th–September 14th, 2018)

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Market Overview

This week, the daily average global cryptocurrency’s market capitalization was $197.269 billion, representing a 13.67% decrease from last week. Among them, the Top 5 cryptocurrencies’ market cap decreased by 13.81%;The daily average transaction volume was $11.84 billion, representing a 15.37% decrease. Meanwhile, the Top 5 cryptocurrencies’ transaction volume decreased by 13.36%. All of them, BTC and EOS held their price, they experienced a maximum price increase of 6.43% and 17.7% individually. But ETH had a maximum price drop of 23.58%.

Among the top 10 cryptocurrency gainers this week, most of the projects were in the direct application field. HyperLending, a token in Asset Management industry, experienced the greatest increase in price by 397%.

Analysis of Top 200 Market Cap Projects

Until 12:00 p.m. of the releasing date, the market capitalization of the top 200 projects decreased by 2.35% compared with last week. Based on our classification of 4 categories: cryptocurrency and payment, basic chain and protocol, vertical chain and protocol, and vertical industrial application, the projects of the vertical chain and protocol sector decreased the most.

Through further classification of the vertical chain and protocol and the vertical industrial application sectors, it was found that Notary sector experienced market cap increase as high as 35.63%, but IoT field’s market cap decreased by 31.07%.

Analysis of Newly Listed Projects

According to latest announcements from more than 30 exchanges including OKEx, Binance, Huobi, Bitfinex, Bithumb, ZB.com, Upbit, HitBTC, Bittrex, Poloniex, there are 9 newly listed cryptocurrencies and 10 newly listed trading pairs. Among them, USE/BTC and MGO/BTC increased in price by 180% and 56.25% individually.

Analysis of Closed Public Offering Projects

There have been 25closed public-offering projects this past week, with the soft cap totaling nearly 268 million USD. Among these projects, asset management’s projects have the largest soft cap, exceeding 30million USD.

Important News on Global Governmental Policies this Past Week

Bahamas: The central bank of the Caribbean state The Bahamas issued an ICO warning to the public, saying that the central bank and other domestic regulators have never authorized any digital currency operator to issue digital currency or provide digital currency transactions, loans, or fiat currency processing services. The Central Bank of The Bahamas also announced that it will not regulate or supervise cryptocurrencies, and it has never authorized any entity to operate cryptocurrency platforms.

Uzbekistan: The Uzbekistan President Shavkat Mirziyoev issued an executive order saying that incomes related to cryptocurrency won’t be taxed, exchanges operating cryptocurrency and foreign fiat currencies are not subject to the current foreign exchange regulations, and the cryptocurrency exchanges are not subject to the country’s securities and exchange regulations.

China: Xu Zhong, Director of the Research Division of the People’s Bank of China, pointed out in his speech that blockchain will be used in three financial sectors in the future: trade financing, receivables and digital notes. Blockchain application prospects should be considered rationally. It is necessary to fully understand what it can and can’t do, and to effectively prevent and control risks while taking advantage of its strengths.

Belgium: Belgium’s Financial Services and Markets Authority ‎‎(FSMA) issued its latest warning about crypto-related fraud, and added 28 new crypto trading sites ‎to its fraud blacklist. According to the agency, this list was completely based on FSMA’s investigations, in particular from customers’ reports.

Iran: The Iranian government has recognized cryptocurrency mining as a legitimate activity, as a part of the government’s efforts to introduce cryptocurrencies into the country. The news caused Bitcoin’s price to soar to record levels on local exchanges. According to IBENA, a subsidiary of the Iran’s Central Bank, Abolhassan Firouzabadi, secretary of Iran’s Supreme Cyberspace Committee, said that cryptocurrency mining “has been accepted by the government.”

Australia: Australia’s New South Wales Government will launch a digital driving license system based on blockchain in November. More than 140,000 local residents will be able to update their driver’s licenses on the Service NSW mobile app to get a digital smart copy based on blockchain.

Keeping Up with the Blockchain Giants

September 8th

IBM is working with the US Centers for Disease Control and Prevention (CDC) on data projects. CDC has been helping IBM build a blockchain-based monitoring system to help hospitals and doctors to get prescription information. The system provides access to data of current prescription, as well as how antibiotics and opioids are being prescribed.

September 9th

Japan’s Dentsu Tec has established a subsidiary for personal information management. It plans to apply AI and blockchain technology for data distribution.

September 10th

The well-known blockchain investor (formerly from Danhua Capital) Dovey Wan released an article titled “Hello, Primitive Ventures” to announce the establishment of a new private equity group. Dovey Wan and former INB US partner Eric Meltzer jointly announced establishment of the new institution on Twitter, and released “The Primitive Manifesto”.

September 11th

France’s energy company Engie and business consulting group Maltem are launching a new blockchain development project for commercial customers. The new company, called Blockchain Studio, will target customers in Asia and Southern Europe. Its first product will be software to accelerate the development of blockchain projects.

September 12th

Sun Jianping, Chairman and CEO of China Ping An Property Insurance Co., Ltd., said that the company has used high-tech solutions to improve project management. Through the introduction of four core technologies — intelligent cognition, artificial intelligence, blockchain and cloud technology — the company aims to optimize poverty alleviation projects, ensure precision down to the household level, and improve the efficiency of poverty alleviation.

September 13th

Morgan Stanley plans to launch Bitcoin swap transactions. Investors will be able to trade long or short positions in Bitcoin through price return swaps, while Morgan Stanly earns transaction fees. The bank is now technically ready to launch the service, after confirming customers’ needs and undergoing regulatory approval.

September 14th

Japan’s financial giant SBI Holdings will launch its payment application moneytap, available for iOS and Android devices. It is built on Ripple’s distributed ledger technology.

Hot topic of this week: GUSD, the world’s first regulated stablecoin

On September 11, the GEMINI Exchange announced its official issuance of GUSD, the world’s first regulated price-stable cryptocurrency. The stablecoin is pegged to the US dollar at 1:1. GUSD is structured as an ERC-20 token issued by Gemini Trust Company in New York, and regulated by the New York Department of Financial Services (NYDFS), with initial circulation of $100,000.

The stability mechanism of GUSD is similar to USDT. The Gemini Trust Company is responsible for the US dollars held in reserve for exchange guarantees, and for disclosing the US dollar deposit balance under the supervision of the US regulators. The company promised that users will be able to convert GUSD into the US dollar at a 1:1 rate. Customers can redeem US dollar direction on the Gemini Exchange for GUSDs. Customers will also be able to automatically convert Gemini dollars into US dollars by depositing them into their Gemini accounts. Therefore, GUSDs are created at the time of withdrawal from the Gemini platform and redeemed or “destroyed” at the time of deposit into the platform. The GUSD circulating in the market should be equal at all times to the US dollar deposit balance that Gemini Trust holds in reserve.

The Meaning of Stablecoin

Restricted by policies, laws and regulations, many exchanges are currently not allowed to trade in fiat currency, so stablecoins have become a temporary substitute, and are used as a transaction pair. The main stablecoins currently include USDT, TrueUSD, DAI, and BitUSD. Among them, USDT dominates the market, and the main exchanges essentially all trade USDT.

The Importance of Regulation

Stablecoins currently on the market mainly use three stability mechanisms: fiat currency pledge, encrypted asset pledge, and dual currency construction. Among them, fiat currency pledging, being simple and reliable, is currently a popular practice. The most prominent problem however is centralized fund management. Fund managers’ reliability is often questioned, because they can use or transfer users’ pledge funds without any regulation.

With the participation of regulators, the past situation can be improved in the following ways. First, the security of funds is guaranteed. Since trust fund adopts a co-managed account structure, regulators are able to know about changes in the account, and can promptly stop any fraud and transfer that may occur, and recover the losses.

Second, the accuracy of information disclosure has been improved. To prevent moral hazard, account audit of the trust fund is conducted by a third party designated by the regulators.

Possible Impact

The launch of GUSD boosted confidence in the entire cryptocurrency market. Although its current circulation is still very small (no more than $100,000), GUSD points to stablecoin moving in the direction of supervision, transparency and compliance. In the future it may become a powerful challenger to the USDT.