TrustToken Wants Coinbase To Be "Worried"
Stablecoins are fiat gateways, not just volatility hedges
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Few crypto companies can count themselves as effective Coinbase rivals, but one startup plans to give Brian Armstrong a run for his bitcoin. TrustToken is planning to challenge Coinbase’s position as a leading entry point for cryptocurrencies.
Rafael Cosman, TrustToken’s co-founder and Head of Engineering and Product, told Crypto Briefing that his company is planning new fiat on-ramps for rival exchanges, to create additional gateways into the space.
At present Coinbase is one of the most popular gateways into the asset class, with over 25 million users. According to CryptoCompare, the exchange-cum-wallet-cum-custodian’s top five USD trading pairs have a combined daily volume of $172M. On Kraken, the nearest rival, the top pairs have a combined daily volume of only $85M.
Coinbase is playing King of the Hill: it stays top but must constantly battle against challengers to its crown.
Sometimes these challenges come from unlikely places. TrustToken can automatically mint stablecoins with funds sent directly via wire transfer. They currently support four different fiat currencies, including the U.S. dollar and pound sterling. There are plans to add support for the Euro and the Hong Kong dollar, later this year.
“Coinbase should be worried,” said Cosman. “We’re helping competitors have the fiat backing that will rival them.” Users will be able to move in and out of crypto at the touch of the button, he said, swapping fiat currencies into stablecoins that can then interact with other digital assets.
TrustToken has already thrown down the gauntlet. Earlier this week, the company announced an integration with Binance, allowing exchange users to easily move funds between TrueUSD and the underlying fiat currency. Currently in beta, it is expected to be rolled out later this year.
“Moving between crypto and fiat markets is still a major pain point for many of our users,” explained Jai Ann, TrustToken’s CEO. “We’ve listened to what the market wants, and will be rolling out many more solutions to easily purchase and redeem TrueUSD. [Our] partnership with Binance is a major step in this direction.”
Users with a U.S. bank account will be able to redeem stablecoins for fiat on the same day, while it may take up to two days for overseas users, according to Cosman. Providing a fiat onramp into crypto “is one of the killer-apps for stablecoins,” he explained.
“[But] to be the best fiat onramp, we need instant redemptions,” he added. Following the Binance integration, there are plans to add an Asian banking partner to speed up the process for users in the region.
Can a stablecoin really rival Coinbase?
Stablecoins are popular hedges against market volatility. It’s no coincidence that the number of stablecoin providers expanded rapidly in late 2018, the beginning of ‘crypto winter.’
During the 2019 Paris Blockchain Week, eToro announced eight new stablecoins, and Wirex launched twenty-six a week later. Binance CFO Wei Zhou told Bloomberg yesterday that the exchange would also issue its own stablecoins.
TrustToken, which launched in 2017, has made inroads into other sectors, exploring new use cases for its tokens. When TrueGBP was unveiled earlier this year, Cosman said it would have a “massive impact” on FX markets, providing 24/7 trading with lower fees and faster transaction times.
The move into fiat onramps is part of TrustToken’s efforts to expand its use cases. Setting themselves up as a rival to Coinbase is a risky move. If successful, it could completely overhaul how value enters the ecosystem.
But as Omar Little once said in the Wire: “You come at the King, you best not miss.”