crypto strategy

Abra joins $152 billion Stablecoin market on its way to becoming a bank

Abra, the crypto brokerage looking to register as a bank, is jumping on the consolidated stablecoin bandwagon, following the path taken by Binance.

Bill Barhydt, the company’s CEO, said Forbes that it plans to “consolidate all stablecoins into one in the coming weeks,” that being its own newly launched USD-A balance.

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

Stablecoins, as their name suggests, are not meant to fluctuate at all, with all majors being at least nominally 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 terra collapse showed, sometimes very large amounts – so the consolidated strategy provides something akin to arbitrage to get the best price. Customers deposit and withdraw the coins of their choice within the framework of the system.

Abra, which earlier this year partnered with American Express
to launch the first crypto rewards credit card, says its consolidation of stablecoins is part of the process of registering as a state-chartered bank. Among the company’s product offerings, including lending, staking, borrowing as well as buying/selling crypto, Barhydt says the combination of services “is starting to look and feel more and more like a bank.

“This will set us up [to] treat these stablecoins like real money for your salary,” he added.

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

The $152 The trillion stablecoin sector is largely dominated by the three major coins – tether, UDC and BUSD – and accounts for around 16% of the cryptocurrency market, currently valued at $952 billion, according to nomic.

Unlike Binance, whose stablecoin BUSD was launched in September 2019 and held a market capitalization of $19 billion prior to the announcement earlier this month, Abra will not be deleting other stablecoins or consolidating under its own coin. Instead, it plans to aggregate client stablecoin balances, which will appear as a single position under the name USD-A.

All stablecoins, except tether which Barhydt says Abra will treat differently because “it’s just its own thing”, would be part of this new centralized position. Tether’s reserves have been called into question by US courts as a 2019 class action lawsuit alleged that the company manipulated the crypto market by issuing unbacked USDT. A judge on Tuesday ordered Tether to prove what backs up its stablecoin.

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

Although Abra’s assets under management peaked in November 2021 at $2 billion, the market downturn caused them to fall. Barhydt says they remain at “over $1 billion for loans, exchanges and funds.” The company’s key rewards program, CPRX, was also halted in June due to low liquidity, a company says blog postwith recovery plans at the end of 2022.

Stablecoins have caught the attention of US lawmakers. The House of Representatives is considering a bill that would put a two-year ban on terra-like algorithmic varieties.

Still despite the likelihood of increased regulation, Barhydt is optimistic about the use of stablecoins, telling attendees at the SALT conference in New York this month that he “hopes stablecoins will win against digital currencies. from the central bank” for the widespread adoption of cryptocurrency.


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