Abra joins the $ 152 billion Stablecoin market in the process of becoming a bank

Abra, the cryptocurrency broker looking to register as a bank, is jumping on the established stablecoin bandwagon, following the path taken by Binance.

Bill Barhydt, said the company’s CEO Forbes which is planning to “consolidate all stablecoins under one in the coming weeks”, that being its newly launched USD-A balance.

Abra’s USD-A “moves automatically” among other stablecoins to get customers the best price against the dollar, says Barhydt. The company lists many of the best stablecoins by market cap, including tether, USD coin (USDC), Binance USD (BUSD), true USD (TUSD), pax dollar (USDP), and dai.

Stablecoins, as the name indicates, are not bound to float, with all major ones at least theoretically pegged to the US greenback on a one-to-one basis and backed by various types of collateral. But they can vary by small amounts – and as the Earth crash has shown, sometimes by very large amounts – so the established strategy provides something akin to arbitrage to get the best price. Customers deposit and withdraw the coins of their choice in the system.

Abra, who partnered with American Express earlier this year
to launch the first cryptocurrency rewards credit card, it says its consolidation of stablecoins is part of the registration process as a state bank. Among the company’s product offerings, including lending, staking, lending and buying / selling of cryptocurrencies, Barhydt says the combination of services “is starting to look more and more like a bank.”

‚ÄúThis will set us all right [to] treat these stablecoins as real money for your salary, “he added.

Abra is following in the footsteps of Binance, which announced it would remove three rival stablecoins – USDC, USDP and TUSD – and convert them to the company’s stablecoin, BUSD. The coin’s daily trading volume jumped 56% to over $ 6.5 billion following the early September news, with its market capitalization reaching $ 21 billion today. BUSD is the second largest stablecoin by trading volume, with approximately $ 10 billion traded in the past 24 hours.

The $ 152 billion stablecoin industry is largely dominated by the top three currencies – tether, UDC and BUSD – and accounts for about 16% of the cryptocurrency market, currently valued at $ 952 billion, according to Nomics.

Unlike Binance, whose BUSD stablecoin launched in September 2019 and held a market cap of $ 19 billion prior to the announcement earlier this month, Abra will not remove any more stablecoins or consolidate under its own currency. Rather, it plans to aggregate customers’ stablecoin balances, which will show as a single position with the name USD-A.

All stablecoins, with the exception of tether, which Barhydt says Abra will treat differently because “it’s just a thing of its own,” would be part of this new centralized position. Tether’s reserves have been questioned by US courts as a 2019 class action alleged that the company manipulated the cryptocurrency market by issuing USDT without support. A judge ordered Tether on Tuesday to demonstrate what its stablecoin supports.

Barhydt says he believes centralized stablecoins benefit customers. “You don’t have to worry about liquidity differences between stablecoin pairs,” she says. USD-A will be used to earn interest as part of the Abra Boost program, the renamed Abra Earn which allows customers to earn interest on their cryptocurrency holdings and the currency received when they borrow against all other coin offerings, she adds.

Although Abra’s assets under management peaked at $ 2 billion in November 2021, the downturn in the market drove them to the downside. Barhydt says they remain at “over $ 1 billion in loans, exchanges and funds”. The company’s key rewards program, CPRX, was also halted in June due to low liquidity, according to a post on the company’s blog, with plans to resume in late 2022.

The stablecoins have attracted the attention of US lawmakers. The House of Representatives is considering a bill banning ground-like algorithmic varieties for two years.

Despite the likelihood of more regulation, Barhydt is bullish on stablecoin usage, telling attendees at this month’s SALT New York conference that “hoping stablecoins win against central bank digital currencies” for traditional adoption of the cryptocurrency.


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