Tech
Blockchain startup Figure Technologies seeks US regulatory approval for interest-bearing stablecoin
Last Updated: January 23, 2024 12:52am EST | 2 minute read
Financial technology firm Figure Technologies is seeking approval from US regulators to introduce an interest-bearing stablecoin.
Founded by former SoFi Technologies CEO Mike Cagney, if successful, Figure will become the first company to do so offer a stablecoin regulated as a security in the United States, Bloomberg reported Monday.
In October, Figure filed a draft registration statement with the Securities and Exchange Commission (SEC) under the subsidiary name Figure Certificate Co.
The registration document reveals that Figure plans to register the stablecoin as “nominal amount certificates,” a type of fixed income security, and intends to issue it using blockchain technology.
Upon approval, the stablecoin will be available to both retail and institutional investors in the United States.
Figure markets trying to raise $50 million
Figure Markets, Figure’s digital asset division, is reportedly seeking to raise $50 million at a valuation of $250 million, excluding the amount raised.
Jump Crypto is potentially considered a lead investor for this funding round, although both Figure and Jump declined to comment on the matter.
Currently, the market for stablecoins, which are tokens pegged to assets such as the U.S. dollar, is largely dominated by Tether Holdings Ltd.’s USDT, with $95 billion in circulation, followed by Circle Internet Financial’s USD Coin.
These stablecoins offer no interest and are primarily used by cryptocurrency traders to settle transactions or transfer assets between exchanges.
Many stablecoin issuers outside the United States have refrained from offering interest-bearing products in the country due to concerns about potential SEC regulations classifying them as securities.
Figure, on the other hand, expects that its stablecoin will be seen as an alternative to existing stablecoins for payments and transaction settlement, according to the document.
The company believes buyers may be interested in an instrument that offers guaranteed returns from highly liquid, investment grade assets, which can be held digitally, liquidated quickly and used for peer-to-peer transactions.
Figure’s stablecoin is redeemable at 1 cent per certificate
Unlike most stablecoins pegged at a 1:1 ratio with the US dollarFigure’s stablecoin will be redeemable at a value of 1 cent per certificate.
This means that a payment of $1 will require the transfer of 100 certificates.
Interest will accrue daily and be paid monthly to stablecoin holders.
The document says the interest will come from reserves made up of Treasury securities, commercial paper, corporate debt and other assets. Holders will need to complete a customer awareness process to register and obtain stablecoins.
It should be noted that approval of Figure’s proposal is not guaranteed, and that the application process will likely intensify debates over how stablecoins should be regulated in the United States.
While previous attempts by US lawmakers to introduce stablecoin laws have been unsuccessful, oversight of the industry has been identified as a priority by President Joe Biden.
Circle, another major player in the stablecoin market, recently confidentially filed for an initial public offering, more than a year after canceling its IPO plans via a blank-check deal.
In addition to the interest-bearing stablecoin, Figure is also applying for registration of an investment offering called the Figure Installment Certificate.
This product aims to cater to investors interested in earning returns by holding digital assets.