BitMEX co-founder Arthur Hayes proposes Bitcoin-based stablecoin
Amid US regulators increasingly scrutinizing stablecoins, the community continues to present new ideas about stablecoins independent of the US dollar.
Arthur Hayes, co-founder and former CEO of BitMEX cryptocurrency exchange, has proposed creating a new stablecoin with a value tied to the sum of $1 worth of Bitcoin (BTC) and a reverse perpetual swap of BTC to USD. He outlined the idea of the potential Satoshi Nakamoto Dollar (NUSD), or NakaDollar, in a blog post titled “Dust on Crust” on March 8.
Unlike major reserve-backed USD stablecoins such as Tether (USDT) and USD Coin (USDC), the proposed NakaDollar will not depend on any USD reserves, but will rely only on derivatives exchanges that list floating inverse perpetual swaps, Hayes said.
The proposed stablecoin is planned specifically based on a set of short BTC positions and USD inverse perpetual swaps, maintaining its 1:1 link to the USD via mathematical transactions between the new Decentralized Autonomous Organization (DAO), NakaDAO, Authorized Participants (AP) and derivatives exchanges.
The process of creating the NakaDollar stablecoin will be completely free from movements of the USD, which require the services of banks, Hayes said. He still noted that the proposed NUSD stablecoin will not be truly decentralized, adding:
“The points of failure in the NakaDollar solution will be centralized crypto derivatives exchanges. I excluded decentralized derivatives exchanges because they are not nearly as liquid as their centralized counterparts […]”
The news comes as the owner of Silvergate Bank, a major cryptocurrency-enabled bank in the US, is shutting down operations and winding down amid the ongoing market downturn. The shutdown came quickly after the New York Department of Financial Services abruptly ordered Paxos Trust to stop issuing BUSD, one of the largest dollar stablecoins on the market. As previously reported, Paxos had deposits in a few banks, including Silvergate and Signature cryptobank.
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Hayes is not alone in considering USD-independent stablecoins amid ongoing pressure from regulators. In February, Binance CEO Changpeng Zhao suggested that the cryptocurrency industry is likely to move to other fiat currencies as a base for stablecoins, including the euro, yen or Singapore dollar.
