Figure Technologies Inc. is a fintech firm spearheaded by former SoFi Technologies CEO Mike Cagney. This company is making strides towards introducing a novel financial product in the digital currency world. The company is currently seeking approval from the U.S. Securities and Exchange Commission (SEC). They want to issue what could potentially be the first-ever interest-bearing stablecoin regulated as a security in the United States.
What is an interest-bearing stablecoin?
According to a recent report from Bloomberg, Figure Technologies filed a draft registration statement in October with the SEC under its subsidiary, Figure Certificate Co. The filing outlines the company’s ambitious plan to classify this new stablecoin as “face-amount certificates,” positioning it as a type of fixed-income security.
Additionally, this approach represents an extraordinary deviation from the norm established by dominant stablecoins like Tether’s USDT and Circle’s USDC, which do not offer interest to holders. The proposed stablecoin will offer interest, accruing daily and payable monthly to holders. Also, this interest will come from a diversified reserve comprising treasury securities, commercial paper, corporate debt, and other similar assets.
Similarly, what sets this stablecoin apart is its redemption value of 1 cent per certificate, requiring the transfer of 100 certificates for a $1 payment. Furthermore, this feature aligns with Figure’s vision to offer a stablecoin that not only provides yield but is also suitable for quick liquidation and peer-to-peer transactions.
Unraveling the potential investors
Figure Markets, the digital asset division of Figure Technologies, will raise $50 million at a valuation of $250 million. Additionally, this funding round may see significant investment from Jump Crypto. However, neither Figure nor Jump Crypto has commented on this matter yet.
The potential approval of Figure’s stablecoin by the SEC is set to fuel significant discussion about the regulation of stablecoins in the U.S. Finally, it is a topic that has gained traction among lawmakers and the Biden administration.
Source : AMBCrypto by Prakriti Chanda / Jan 23, 2024