Abra CEO Bill Barhide speaks at SALT NYC and announces Abra Bank.
Maria Grace Santilana
Abra, the crypto brokerage firm looking to register as a bank, is jumping on the consolidated stablecoin bandwagon, following Binance’s path.
This was announced by the company’s CEO, Bill Barhide forbes That it plans to “consolidate all stablecoins under one in the coming weeks” with one having its own newly launched USD-A balance.
Abras USD-A wants to “move automatically” Barhydt says it alongside other stablecoins to bring customers the best price against the dollar. The company lists several top stablecoins by market cap, including Tether, USD Coin (USDC), Binance USD (BUSD), True USD (TUSD), Pax Dollar (USDP), and Dai.
Stablecoins, as the name suggests, are not volatile at all, all major ones are at least theoretically pegged to the US dollar on a one-to-one basis and are backed by a variety of collateral. However, they can vary by small amounts – and, as Terra’s case has shown, sometimes by very large amounts – so the consolidated strategy offers something of arbitrage to get the best price. Customers deposit and withdraw coins of their choice under the system.
Abra, which partnered with American Express AXP earlier this year to launch the first crypto rewards credit card, says the consolidation of stablecoins is part of the process to register as a state-approved bank. Across the company’s product offerings, including lending, staking, borrowing, and buying/selling crypto, Barhide says the combination of services tends to “look and feel like a bank.”
“It will build us up [to] Treat these stablecoins like real money for your salary,” he said.
Abra follows in the footsteps of Binance, which has announced that it will delist three competing stablecoins — USDC, USDP, and TUSD — and convert them to its proprietary stablecoin, BUSD. Daily trading of the coin surged 56% to over $6.5 billion following the news in early September, with the market cap hitting $21 billion today. BUSD is the second largest stablecoin by trading volume with almost $10 billion in trades in the last 24 hours.
According to Nomics, the $152 billion stablecoin sector is dominated by the three largest coins – Tether, UDC and BUSD – and accounts for about 16% of the cryptocurrency market, which is currently valued at $952 billion.
Unlike Binance, whose stablecoin BUSD launched in September 2019 and had a market cap of $19 billion prior to the announcement earlier this month, Abra will not be delisting other stablecoins or consolidating under its own coin. Instead, it plans to aggregate customers’ stablecoin balances, which will be displayed as a single position under the USD-A name.
All stablecoins except Tether, which Barhide says Abra will behave differently because “it’s just his own thing,” will be part of this new centralized state. Tether’s reserves have been questioned by US courts after a 2019 class action lawsuit alleging that the company had manipulated the crypto market by issuing unsecured USDT. A judge on Tuesday ordered Tether to prove what’s behind its stablecoin.
Barhide said he believes centralized stablecoins will benefit customers. “You don’t have to worry about the liquidity gap on stablecoin pairs,” he says. He further added that the USD-A will be used to earn interest under the Abra Boost program.
Although Abra’s assets under management peaked at $2 billion in November 2021, a market downturn has caused it to decline. Barhydt says they remain at “over $1 billion in debt, trade and money.” The company’s flagship rewards program, CPRX, was also suspended in June due to low liquidity, with plans to resume in late 2022, according to the company’s blog post.
Stablecoins caught the eye of US lawmakers. The House of Representatives is considering a bill that would ban algorithmic strains similar to Terra for two years.
But despite the potential for increased regulation, Barhydt is bullish on the use of stablecoins, telling attendees at this month’s SALT New York conference that he wants to drive mainstream adoption of cryptocurrencies “versus central bank digital currencies.” . Stablecoin hopes for a win”.