What is TrustToken?
The TrustToken Platform is an Ethereum-based dApp to create asset-backed tokens and enable value transfer around the world. TrueUSD (TUSD) is the ERC-20 token and stablecoin that’s pegged to the value of the U.S. dollar. Everything about TrustToken’s marketing is clearly focused on taking advantage of allegations and controversy surround Tether USDT’s ties to the Bitfinex cryptocurrency exchange and Bitcoin price manipulation.
In 2017, cracks began to show in Tether’s armor. More USDT was slipped into the supply, creating a nearly $3 billion market cap by the end of 2017. This USDT was used to purchase BTC on Bitfinex, an exchange with ties to Tether’s development and managing team. Throughout 2018, Tether’s name was dragged through the mud, stifling investor confidence.
But stablecoins are still attractive, and that’s where TrustToken comes into play. Using a TrustProtocol, SmartTrust smart contracts contain full audit trails of every TUSD. Co-Founders Danny An, Rafael Cosman, Stephen Kade, and Tory Reiss really REALLY want you to know you can trust them…so can you?
Before we look for answers to that question, let’s take a deeper look at the TUSD cryptocurrency token and how it performs on the cryptocurrency market.
TUSD Crypto Market Information
TrueUSD is a stablecoin, so the price stabilizes around $1, never hitting it exactly for long. On May 16, 2018, it reached a peak spike so far of $1.30. It has no total supply.
One of the biggest controversies surrounding USDT was whether Tether Limited had the dollar reserves to back its $2 billion-plus supply cap. TrustToken has this liquidity, although it’s obviously working with a smaller market cap at $157 million.
An independent audit is performed by accounting firm Cohen & Company to attest to TrustToken’s escrow reserves being able to cover its account balances. These audits started weekly but have since been pulled back to twice a month (every other week). The money is held in two different banks to distribute the risk, but it should be noted that the FDIC can’t insure balances that high.
TrustToken is backed by a variety of high-pedigree investment funds, including a16z crypto, BlockTower Capital, Danhua Capital, Founders Fund Angel, GGV Capital, Jump Capital, and more.
These investors contributed $21.7 million worth of ETH during the ICO presale from July through August 2018.
TUSD is tradeable on a variety of cryptocurrency exchanges, including Binance, DigiFinex, Kryptono, CPDAX, Bit-Z, Cashierest, and CoinTiger. Approximately $16 million worth of TUSD is traded on a daily basis.
As an ERC-20 utility token, TUSD is supported by any ERC20-compatible Ethereum wallet, including MyEtherWallet and Nano hardware wallets.
Like Tether, TrustToken’s roadmap includes steps to issue tokens for other fiat currencies, like the Euro and Yuan. These would be labeled TrueEUR (TEUR) and TrueCNY (TCNY), respectively. TrustToken is a collateral-backed stablecoin platform, so it can collateralize anything in theory.
In fact, in late April 2019, it released TrustToken stablecoins for the Australian dollar (TrueAUD) Euro (TrueEUR) Canadian dollar (TrueCAD) and the Hong Kong dollar (TrueHKD).
Building Trust in Cryptocurrency
When Bitcoin first launched in the dawn of Occupy Wall Street, cryptocurrency was envisioned by some as a disruptive alternative to traditional money. Trust in banking institutions and the Federal Reserve were at an all-time low, and many were willing to take a plunge (or at least dip a toe) into cryptocurrency.
Getting money out of cryptocurrency was a bit harder, however. So was finding retailers willing to accept it as a form of payment. Volatile pricing means reconciling payments at the end of the day could lead to losses of 10 percent or more.
Stablecoins were meant to provide a port in the storm, ensuring liquid fiat assets were always available for anyone wishing to accept crypto payments or cash out their crypto account balances.
It seemed an easy win, and it was at first. Tether, the first stablecoin, had unclear relationships with cryptocurrency exchange Bitfinex. It was then revealed this connection allegedly contributed to the crypto market price increase in late 2017. Because of this, Tether, stablecoins, and the cryptocurrency industry as a whole received a black eye.
Since then, stablecoins from Circle, the Winklevoss twins, Paxos, and more were released. TrustToken is one of this new stable of coins, and it distributes the risk associated with Tether by holding the money in escrow. This means TrustToken doesn’t have direct access to the funds, and if the project were shut down, the funds would still be theoretically accessible to users.
In addition, TrustToken has busily been registering with government regulators. It’s a registered money service provider with the U.S. Department of the Treasury. As such, it has Know-Your-Customer (KYC) and Anti-Money-Laundering (AML) requirements for account holders and trades.
In this aspect, TrustToken acts much like a bank, so let’s discuss how it compares to traditional banking operations and regulations.
Regulatory Requirements of Stablecoins vs Banks
A lot of noise is made about stablecoins needing to hold enough cash in reserves to cover all trading in the event of a bank run. However, banks aren’t held to this standard in the U.S., which practices fractional reserve banking.
U.S. banks with less than $15.2 million in transaction accounts have no minimum reserve requirement. From $15.2 million to $110.2 million, three percent must be held in reserves, and 10 percent must be held in reserves for banks with accounts totalling over $110.2 million.
This means TrueUSD’s market cap places it on the highest end, which should only require 10 percent to be backed by the U.S. dollar.
Of course, cryptocurrencies like TrustToken aren’t regulated like currencies. For the time being, they’re taxed and regulated as commodities unless otherwise noted.
The whirlwind of bad press surrounding Tether is why TrustToken goes above and beyond to ensure it stays within regulations.
TrustToken isn’t hoping TUSD will be its one and only cryptocurrency token. The end-goal is to cover assets of all types, whether currency, precious metals, gemstones, real estate, and more.
It also has aggressive development, adding real-time reserves verification in March 2019. TrueUSD is one of four stablecoins (including USDC, PAX, and DAI) that backs the aggregate Neutral Dollar. The project is notable for excluding Tether (USDT) and Gemini (GUSD) from its calculations.
As cryptocurrency continues to reach for mainstream acceptance, stablecoins like TrustToken have the spotlight. The TrustToken platform hopes to differentiate itself from the pack and build a decentralized trust system for assets of all types. Its success hinges on these key ingredients.
- TrustToken is backed by over a dozen accredited institutional investors. It has the money to back its entire TUSD supply, which is attested to through regular independent audits.
- Dollars are held in escrow distributed across multiple trusted banks (two so far). TrustToken doesn’t have access to the money as a safeguard against Tether-like price manipulation.
- TUSD is the first asset-backed stablecoin on the TrustToken platform. More fiat currencies and other assets are planned for onboarding in the future.
If TrustToken can maintain consumer and enterprise trust, it has the right roadmap to disrupt cryptocurrency. That’s easier said than done, and TUSD’s fate may inevitably be tied to USDT.