Coinsquare, a popular Canadian cryptocurrency exchange, has recently revealed it’s going to launch a Canadian dollar-backed stablecoin called eCAD, meaning each circulating eCAD is set to be backed 1:1 by a Canadian dollar in its reserves.
According to a recently published press release, Coinsquare’s new stablecoin is set to be a reliable store of value that gives investors an alternative to the cryptocurrency ecosystem’s stablecoins, which are backed by US dollars or euros.
The document notes eCAD will help in “Coinsquare’s mission to become a 21st century financial institution,” as it’ll allow the firm to “explore and optimized” financial services such as cross-border transactions, remittance payments, and peer-to-peer lending.
The company’s chief executive officer, Cole Diamond, stated:
The launch of eCAD will create the first transparent, affordable, and secure way of transferring value in Canada and beyond, without the risk of instability in the traditional cryptocurrency market.
Coinsquare stressed in its press release each circulating eCAD will be backed by a Canadian dollar in reserves. This, presumably as some stablecoins have in the past not been able to show adequate proof their circulating supply was backed by fiat currency.
Specifically Tether’s USDT is believed by some to not be backed by actual US dollars, so much so that investors have priced in a BTC/USDT premium when Bitfinex – a company that shares management with Tether – had temporary deposit and withdrawal problems.
The company behind the popular stablecoins with over $2 billion in circulation is said to be being investigated by the US Justice Department and by the US Commodities Futures Trading Commission (CFTC).
Late last year, evidence pointing to Tether actually having US dollars in reserves to back every USDT in circulating started surfacing. Research has found that USDT has been dominating the stablecoin sector.
Recently, Tether changed its policy to note that while USDT tokens are backed by its reserves, these aren’t al in USD, but instead may include “traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties.”
It’s worth noting Riot Blockchain, a crypto mining firm that reported a $58 million net loss last year, has a minority stake in Coinsquare.