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Diem plans to replace USD stablecoin with gov digital dollar
Christian Catalini, the chief economist of Diem (formerly Libra) said that the recently announced Diem USD stablecoin is only intended as an interim step until the U.S. Federal Reserve issues a central bank digital currency (CBDC) or digital dollar.
“Diem has committed to fading out, for example, Diem dollar, if there were such a thing as a digital dollar issued by the Fed,” said Catalini talking at Consensus 2021. “The public sector has a large comparative advantage in developing anything that has to do with stability, money, value preservation and macroprudential policy. We don’t want to change that. In fact, we want to build on and take advantage of that infrastructure to accelerate use cases for consumers both domestically and also globally.”
Business model
A key reason why Diem would be willing to do that is it won’t rely on interest income on the reserves that back the stablecoin. Those reserves will mainly be in the form of Treasuries with maturities of less than 90 days. Instead, Diem will generate revenues from transaction fees which it claims will be very cheap, at less than 0.1%.
The economist didn’t mention its partners, such as Facebook, as the reason why costs could be low given the potential scale it could achieve. Instead, he pointed to Diem’s cost-effective technology choices and the fact that other payment providers have legacy infrastructure and are not interoperable. Diem envisages a small wallet being able to compete with a larger wallet because of interoperability, driving competition and consumer choice. Notably, choice will not just be based on price but also privacy.
Privacy and competition
Privacy and competition are two issues that concern Diem critics. Catalini expanded on the privacy aspect. “This is a technology that is innovating on the privacy landscape when it comes to selective disclosure and what you can really do with it,” said Catalini. “Diem is going to be privacy by design, and we also want to encourage privacy as a dimension of competition on the network.”
On the same panel, Benedicte Nolens of the BIS noted that for consumer cross border payments, the decision-making issues are usually trust, ease of use and cost. From that, one might conclude that most may be willing to trade privacy for a lower cost.
Restrictions on DeFi
Diem has had “intense conversations” with the Fed as a result of which Catalini believes Diem will be the ‘gold standard’ of stablecoins. He noted that stablecoins are heavily used in decentralized finance (DeFi). “There’s a lot of innovation in that space,” he said. “But at the same time, when you tag on DeFi on top of a stabelcoin, what you are essentially doing is reintroducing leverage into a system that is meant to be one-to-one backed. And that’s something that we don’t want on the Diem ecosystem.” Wallets and exchanges will not be able to fractionalize their coin holdings on Diem.
To put that in context, the USDC stablecoin has a total issuance of $21 billion. On the top two decentralized lending sites Aave and Compound, $7.6 billion have been deposited for the purposes of lending out.
Catalini compared the Diem model to the early internet, where the public sector initially developed the backbone infrastructure “and then you had an explosion of commercial activities on top of that.”
“And it is really through that interplay between public and private that I think we can deliver a stablecoin that a consumer can hold in their hands safely, go and spend it like in traditional payment systems, while at the same time getting extremely low fee instant payments and low friction both domestically and cross border,” said Catalini.
Stable Coin Developer X8 AG Planning to Have Its Common Shares Listed on North American & European Stock Exchanges
FRIBOURG, Switzerland, May 03, 2021 (GLOBE NEWSWIRE) – X8 AG. (X8) in preparation for the launch of its crypto X8currency stable coin, X8 is planning to have their common shares apply for listing on the Canadian Securities Exchange (CSE) with cross listings planned for the Open Market Segment of the Frankfurt Stock Exchange (FSE) in Germany and the Over the Counter Market (OTC) in the USA.
X8 AG has selected Listing Partners Sarl, as exclusive financial advisors in connection with the listings.
Listing Partners will be advisors and underwriters to X8 in a contemplated pre-listing offering of common shares through syndication of the issue to its underwriting group. In addition, as part of the Listing Partners group’s international affiliations, Antevorta Capital Partners Ltd. has been engaged to provide listing services to assist X8 with the listing process on the CSE, FSE and the OTC.
As part of the listing process, X8 is required to have prepared a non-offering prospectus for submission to the securities regulators for review and approval. Should the prospectus clear the approval process an application to list the X8 common shares on the CSE will be submitted for listing approval. Once the CSE listing is granted, submission of application to cross list on the FSE and OTC is planned for.
Gregor Koželj, CEO of X8 said today: “Currently, there are no other stable coin projects listed on a regulated stock exchange. We believe this exclusive position will boost X8’s visibility to the forefront along with gaining significant recognition and access to the capital markets.” He added “Simultaneously X8 AG is applying to have the X8currency stable coin authorized by the Swiss Financial Regulator, FINMA”.
The public listing of X8 AG is expected to allow capital market investors the rare opportunity to invest directly into a stable coin development project that management believes could have a global long-term vision. The X8currency stable coin work in progress is a value preservation digital currency payment instrument that is expected to challenge the established tokenized payment instruments with a cutting edge fintech of its own.
About X8 AG
Established in 2018 and headquartered in Switzerland, X8 AG intends to provide global digital cross-border payment instrument solutions that are cost-efficient and reliable. The company successfully launched its Initial Coin Offering of the X8X utility token. Currently, X8 is preparing to launch its X8currency stable coin as a digital currency by way of its application to FINMA which upon approval would award X8 to move forward with its market operations under a regulatory Sandbox regime and to further apply for a Fintech license (banking license light) as a result. The Regulatory Sandbox regime allows Swiss companies to accept deposits of up to 1 million CHF as a stable coin issuer, while the Swiss Fintech license would allow the company to accept deposits of up to 100 million CHF as a bank, which such deposits could be in the form of the X8currency and assets backing the stable coin units.
Visit: www.X8AG.io
About Listing Partners Sarl and the Listing Partners Ltd group of Companies.
Listing Partners is an international, boutique investment firm operating within the capital markets ecosystem. Their focus is on creating and managing the going public plan for companies by working with top management for successful listing and financing. Antevorta Capital Partners Ltd. is a member of the Listing Partners Group of Companies. It has been successfully assisting small and medium-sized companies in the listing process and raising funds since 1998. Their experience and know-how lead their clients through every aspect of going public, primarily on the Canadian Stock Exchange, which often results in cross listing opportunities in other international markets.
For Investor information contact: info@listingpartners.lu
For More Information about X8 contact: Gregor Koželj, ceo@x8ag.io
Disclaimer
All statements regarding our expected future financial position, results of operations, cash flows, financing plans, business strategy, products and services, competitive positions, growth opportunities, plans and objectives of management for future operations, including words such as “anticipate,” “if,” “believe,” “plan,” “estimate,” “expect,” “intend,” “may,” “could,” “should,” “will,” and other similar expressions are forward-looking statements and involve risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements. X8 AG is under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise.