USDVault Stablecoin: Reinventing the Gold Standard

by | Jun 19, 2018

Vault is pleased to announce USDVault stablecoin, a cryptocurrency pegged 1:1 to the value of the US dollar and backed by gold bullion stored in Swiss vaults.

Vault is backed by a consortium of globally reputed companies with experience in both the precious metals industry and traditional financial services. We believe that a stablecoin pegged to the U.S. dollar and collateralized by gold — one of the oldest forms of currency and stores of value — presents a unique and much-needed offering for individual and institutional investors in the cryptocurrency market.

Why does the world need a stablecoin?

Stablecoins allow for transactions to be carried out with greater confidence in the value of the underlying asset, creating a more inviting atmosphere for general consumers, traders, and institutional investors to utilize in commerce, value storage and/or as an on-ramp into other cryptocurrency investments.

Consumers entering the cryptocurrency market today are immediately exposed to the volatility of BTC or ETH. While price volatility provides opportunities for cryptocurrency traders, the risk of entering the market with immediate exposure to a high volatility cryptocurrency can lead to unanticipated losses. Additionally, given the dominance of US dollars as a unit of account, many users/traders want a cryptocurrency that has similar characteristics and value to the US dollar, while not being exposed to the issues associated with typical fiat/US dollars, including but not limited to cross-border, and cross-user, transfers and banking governance. Stablecoins offer a volatility-neutral landing spot, with most of the advantages of the leading fiat, and few of its disadvantages, for consumers and investors alike.

High friction converting from fiat currencies to volatile cryptocurrencies, arbitrary limits imposed by the traditional banking system, political blacklists, and asset protection are all reason for users, investors and traders to seek out a stablecoin that is price stable vis-a-vis the US dollar and brings many of the advantages and advances of cryptocurrencies.

Cryptocurrencies have the benefits of enabling fast, frictionless, peer-to-peer transactions difficult to achieve in fiat markets, but the systemic risk present in the cryptocurrency marketplace remains a deterrent for consumers, investors and traders alike. An asset-backed reliable stablecoin will provide the global market with a means of reducing risk and volatility.

Why does the market need USDVault Stablecoin?

Current stablecoins have incompletely attempted to satisfy market requirements with limited liquidity, broken trust, controversies over lack of transparency, accounting scandals, black swan issues,  exposure to the banking sector and bank account freezes.

USDVault is a cryptocurrency stabilized with the oldest and most reputable form of a store of value there is — gold. Being backed by gold, held in Swiss vaults, and managed by licensed and well-established fiduciary organizations, USDVault is able to provide a level of surety of its value that other cryptocurrencies don’t. Vault is the technology platform to issue USDVault tokens, and will not have any access to the users’ funds or the underlying gold, which will exclusively be handled by licensed fiduciary partners.

The Vault team brings together technical, legal, and financial talent from top Fortune 500 companies and Ivy League universities to develop USDVault, an investor-grade stablecoin, that is trustworthy in a space beset by a lack of trust and controversy.

Our institutional-level access to gold assets, the depth of our legal team, our extensive fiduciary relationships, and our gold shipping & vaulting relationships allows us to bring the security of the gold standard to cryptocurrency while reducing both credit risk and operational risk, as well as providing price stability in dollar terms to ensure that USDVault tokens always trade at $1 per token.

How does it work?

Vault works with the licensed fiduciaries who manage the users’ funds directly. After passing KYC and AML checks, and signing the required escrow agreement, the user will send funds directly to our fiduciary partners. Upon receipt of funds by the fiduciary, our automated processes will issue the equivalent USDVault tokens to the users’ ERC20 wallets. While USDVault tokens can be traded similar to any other ERC20 token, only users passing the required KYC and AML checks will be able to redeem these tokens for either physical gold bullion or fiat.

Similarly, to redeem in either U.S. dollars or gold, the user first needs to send relevant KYC and AML documents to our fiduciaries, and upon approval send their USDVault tokens to be redeemed. Our fiduciaries will send you U.S. dollars or gold, based on the redemption amount, and your preference.

The third-party fiduciaries buy the gold bullion and store in the Swiss vaults and also execute an appropriate Gold-USD hedging position, a well-established technique to ensure overall value stability. This allows us to ensure USDVault tokens are not exposed to the gold price volatility vis-a-vis the US dollar. Each USDVault token represents a claim on 1 U.S. dollar worth of gold on any given date.

Separating the project from the banking system reduces bank counterparty risk and also serves to minimize the handling of fiat from the equation — while USDVault tokens are worth $1 USD and can be exchanged for fiat, the stability and underlying store of value comes from gold and the tokens can actually be redeemed directly for physical gold bullion or fiat through the third-party fiduciaries.

The fiduciaries will engage with the leading top 3 audit firm to ensure there are regular audits of funds and gold in vaults. These audit reports will be available directly on the Vault website to foster transparency.

From institutional traders to personal investors and just users looking to experience the benefits of transacting in cryptocurrency without the associated risks, Vault provides a solid, transparent stablecoin (USDVault) backed with the oldest and most trusted store of value in the history of money.

Here’s to reinventing the gold standard!

  1. https://www.cryptocompare.com/coins/guides/5-things-you-need-to-know-about-bitcoin-volatility/
  2. https://hackernoon.com/an-overview-of-stablecoins-cf3fac75dcf7
  3. https://medium.com/@bitfinexed/are-fraudulent-tethers-being-used-for-margin-lending-on-bitfinex-5de9dd80f3301
  4. https://www.investopedia.com/news/black-swan-risk-cryptocurrency-markets/
  5. https://www.coindesk.com/bitcoin-exchange-bitfinex-sues-wells-fargo-over-bank-transfer-freeze/