Both co-founders of the digital company FV Bank say they became the first in history to obtain a US patent for a stable design based only on public debt.
The patent application , filed last year on the back of a pre-existing patent by Nitin Agarwal and Miles Paschini, describes their instrument in as a “tokenized crypto asset backed by sovereign debt”.
Its working name is Yuga Coin, which in Sanskrit means "the junction of two things ", or in this case, "generations," Agarwal said in an interview on Tuesday.
"We aim to create several government-compliant stablecoins to your client's knowledge (KYC), anti-money laundering and Financial Action Task Force (FATF) on the basis of different currencies "said Agarwal.
Each coin will be exchangeable 1: 1 for a corresponding national currency where they will be backed by national treasury instruments (including bonds and treasury bills) of the corresponding country.
These stablecoins, dintended to be created under the same Sanskrit banner and denominated in US dollars or euros initially, would be traded in a controlled network adjusted to assess the risk of trading with particular counterparties.
The argument is that these would be more stable than other cryptos pegged to fiat currency because they will not depend on a single financial institution holding the collateral. "The stability of the tokenized crypto asset is more akin to the stability of public debt ", the patent reads.
While the market is now inundated with USDT and USDC ), competition for such an instrument linked to public debt is rare.
" Avanti Bank (Caitlin Long ) talks about stablecoins backed by banks, which hold all funds in government securities and no fractional reserves, "said Agarwal, referring to Avanti Bank & Trust, a long-established bank that serves as a custodian ian for digital assets. "However, to make this multinational and multi-currency, a bank's bottleneck needs to be removed, this is the approach we are taking.
A push to become more compliant in the eyes of regulators is behind many pto the minds of entrepreneurs in their quest for legitimacy. The FATF recently updated its guidelines requiring that virtual assets and their providers follow the same rules as traditional financial institutions.
Bearing in mind this notion, Yuga Coin is also seeking to incorporate regulatory approved identity verification standards and a built-in risk score similar to a FICO credit score in traditional finance.
Agarwal said the Yuga Coins would be verified by a regulated and trusted entity that is later chained registered. Once a person has a verified identity in their wallet, the end user then controls who can see their identity verification.
"We conceptualized This was about three years ago, when the stable coin market cap was less than $ 10 billion, ”Agarwal said. "Today more and more people realize that this is the right way to run a stablecoin.
The intention is to facilitate international government to businesses, intergovernmental transfers promoting trade, transacglobal relationships between businesses and retail, and as a store of value between individuals.
Agarwal describes the potential of design as having "endless possibilities " "capable of providing a reliable means of holding and processing money allowing for " multiple innovations ".
" This is the only way to make stablecoins more government-friendly that promote innovation in banking, payments, finance, capital markets and asset ledger using blockchain, "Agarwal said, noting that these Stable coins would be global, decentralized and immutable and would make transactions easy to audit.
"Crypto is a solution to all anti money laundering problems in the world, and this project provides a way to achieve that "he said. Read more: Risky Stablecoins Like 'Wildcat ' Bank Practices of the 19th Century, Gorton and Zhang write