- Figure Technologies, under ex-SoFi CEO Mike Cagney, has filed for SEC approval to launch the first U.S. security-regulated, interest-bearing stablecoins.
- These stablecoins, unlike traditional ones, will be offered as ‘face-amount certificates’ redeemable at 1 cent each, with interest accruing daily and payable monthly.
In a groundbreaking move within the cryptocurrency sector, Figure Technologies Inc., spearheaded by former CEO of SoFi Technologies Inc., Mike Cagney, has embarked on a journey to secure approval from the U.S. Securities and Exchange Commission (SEC) for a novel form of stablecoins. This venture, if successful, is set to redefine the landscape of digital currencies in the United States.
A New Era of Stablecoins
The initiative by Figure Technologies introduces an innovative model of stablecoins, diverging from the conventional format of these digital currencies. Traditional stablecoins are digital currencies pegged to a stable asset, like the U.S. dollar, and are primarily used for transaction settlements or asset transfers between exchanges. Currently, the market is dominated by entities like Tether Holdings Ltd.’s USDT and Circle Internet Financial’s USD Coin, neither of which offer interest.
Figure’s proposed stablecoins, however, are poised to disrupt this norm. Unlike their predecessors, these stablecoins are planned to be issued as
This means each certificate would be redeemable at 1 cent, necessitating the transfer of 100 certificates for a $1 transaction. The novel aspect here is the incorporation of interest, which would accrue daily and be paid out monthly to holders.
This interest will be generated from reserves that include a variety of assets, such as treasury holdings, commercial paper, and corporate debt. To participate, potential holders must complete a know-your-customer (KYC) process, a standard procedure in the financial industry to verify the identity of clients.
Regulatory Implications and Market Impact
Figure’s move is not just about introducing a new financial product but also about navigating the complex U.S. regulatory environment. The stablecoin market has been a topic of significant discussion and scrutiny, especially considering the lack of interest offerings by current market leaders and the increasing attention from U.S. lawmakers and President Joe Biden on cryptocurrency regulation.
The submission of Figure’s draft registration statement in October, under its subsidiary Figure Certificate Co., is a strategic step towards legitimizing this new category of stablecoins as securities in the U.S. market. The company also plans to register an offering named Figure Installment Certificates, targeting investors interested in earning yields through digital asset holdings.
Figure’s ambition to establish its stablecoins as a viable alternative for payments and transaction settlements is indicative of a larger trend: the growing integration of blockchain technology and traditional financial mechanisms. This integration suggests a future where digital currencies are not just a niche investment or transaction tool but a fundamental component of the financial landscape.
In summary, Figure Technologies’ foray into the stablecoin market with its proposed interest-bearing certificates marks a significant evolution in the realm of digital currencies. It not only offers an innovative financial product but also signals a shift towards greater regulatory oversight and integration of cryptocurrencies into mainstream finance. The outcome of Figure’s application and its impact on the market will be closely watched by investors and regulators alike, as it could set a precedent for the future of stablecoins in the U.S. and beyond.