- TrueUSD partners with Signature Bank’s blockchain-related payments platform Signet.
- The partnership is made to introduce proof of reserve to the stablecoin sector.
- The integration helps users enjoy real-time payments in US dollars 24/7/365.
While mostly known for mitigating crypto volatility, dollar-backed stablecoins make it possible for banks that are integrating private blockchains into their services to facilitate instantaneous cross-border USD payments for their commercial clients.
However, the biggest risk for USD-backed stablecoin users is counterparty risks. It all boils down to proper regulation as central counterparties (CCPs) who typically verify underlying securities (in this case US dollars) are few and far between in the sector. Many stablecoin issuers rarely provide transparency about their USD reserves.
Two players, however, are changing the narrative with a partnership that will allow commercial clients access to the first digital asset-backed 1:1 with the US dollar with a live, on-chain Proof of Reserve (PoR). The two players announcing their partnership are TrueUSD and Signature Bank.
The Synergy between TrueUSD and Signature Bank
The partnership between TrueUSD (TUSD) and Signature Bank is a first step towards introducing Proof of Reserve to the stablecoin sector. For the first time, Signature Bank clients will get exposure to a USD-backed digital asset with independently verified reserves thus eliminating counterparty risk.
The idea of stablecoins is not entirely new. Discussion about electronic money dating as far back as the 1990s inspired proposals for stored value cards that were used in money market funds to facilitate mobile money transfer. The advent of decentralized ledger technologies such as blockchain only accelerated the creation of a new form of digital money and payment system.
Even though stablecoins initially emerged to solve the failure of using Bitcoin and other cryptocurrencies as effective monetary and payment instruments, they have since evolved and are now expected to play an even more important role on a global scale.
Stablecoins can be used as a payment instrument between international institutions as a means of circumventing economic sanctions and other geopolitical barriers. TrueUSD captures the most plausible aspect of stablecoins by not only providing a cross-border payment instrument but also providing transparency verified by third-party attestations. They also partnered with Silvergate Network last year to offer mints and redemptions.
To reduce counterparty risks, TrueUSD uses multiple escrow accounts and provides token holders with legal protection against misappropriation. What’s more, TUSD is built on TrustToken which is a platform that supports the creation of asset-backed tokens.
According to Rafael Cosman (CEO of TrustToken), the mission has always been, “to grow financial opportunities for all, and TUSD’s new partnership with Signature Bank does exactly that by putting the most transparent digital dollar in more hands, more quickly.”
Cosman adds that this new partnership is “offering TUSD users a new way to instantly settle payments via Signet [which] is a key step to grow TUSD’s accessibility, transparency, and utility.”
Benefits of participating in a digital economy
The integration of TUSD into Signature Bank is a game-changing move as Signet Bank clients will be able to enjoy real-time payments in US dollars 24/7/365. Signet Bank boasts of being the first FDIC-insured bank to launch a blockchain-based digital payment platform. The platform is called Signet and operates on the Ethereum blockchain.
As a member of the Federal Deposit Insurance Corporation (FDIC), Signet Bank’s partnership with TUSD further strengthens the bank’s position as a pre-imminent financial institution in the digital space.
According to Joseph J. DePaolo, President and CEO at Signature Bank, “the relationship with TrueUSD enhances Signature Bank’s offering to its existing commercial clients.”
Now, financial institutions eager to benefit from the cost-efficient and speedy nature of cryptocurrency transactions but have reasonable reservations due to the sector’s lack of transparency can participate in a safe environment.
Adding to the positive sentiments about the TrueUSD and Signature Bank partnership, Jennifer Jiang, TrueUSD’s Chairperson said:
TrueUSD was founded to bring trusted financial opportunities to the world.” Jiang added that “TUSD’s integration into Signature Bank’s Signet platform is a monumental milestone for TUSD’s growth and adoption as an attested, dollar-backed digital currency. Out integration into Signet brings global TUSD customers another secure real-time settlement option