USDA would be the first fully fiat-backed, regulatory-compliant stablecoin in the Cardano ecosystem, Emurgo said.
Emurgo, the official commercial arm and a founding entity of the Cardano blockchain, plans to launch USDA, a U.S.-pegged stablecoin, in early 2023.
USDA will be the first fully fiat-backed, regulatory-compliant stablecoin in the Cardano ecosystem.
“The introduction of a fully fiat-backed, regulatory-compliant stablecoin is the next step in realizing the future for our community,” wrote Emurgo Fintech Managing Director Vineeth Bhuvanagiri, in a note to CoinDesk.
Stablecoins are tokens backed by an asset, or a basket of assets, and pegged to fiat currency, such as the U.S. dollar. They serve as an entryway to the crypto market for traditional market participants and are extensively used within the ecosystem as instruments for trading, borrowing, and lending.
USDA is part of Emurgo’s Anzens product, a broader plan that would offer users several financial services and products functioning on Cardano-based assets. These plans include lending and borrowing services, crypto-based card payments and bridges between traditional markets and decentralized applications (dApps).
This could help bolster Cardano’s decentralized finance (DeFi) ecosystem, which locks just over $53 million in value as of Friday, as per DeFiLlama data. That’s an 82% slide since March highs of over $300 million.
USDA is planning to launch on the Anzens platform in Q1 2023 where users will be able to tokenize their USD into USDA via credit/debit cards, wire transfer or conversion of ADA, Emurgo said.
Emurgo has partnered with a regulated financial services company based in the United States as the banking partner to issue USDA, ensuring the stablecoin is fully compliant and adheres to regulatory guidelines, Emurgo said, without naming the company.
Alongside the tokenization of USD, Emurgo will soon enable the conversion of other stablecoins, such as USD Coin (USDC) and tether (USDT) to USDA, with long-term plans to enable conversion and swaps of cryptocurrencies such as bitcoin, ether and other cryptocurrencies.
The move comes months after Emurgo told CoinDesk on the sidelines of Singapore’s Token2049 conference that it would invest some $200 million in the Cardano ecosystem in the coming months to increase network participation.