Cardano’s ecosystem is set to take off its first fully fiat-backed, regulatory-compliant stablecoin by the end of the first quarter of 2023. The stablecoin will be called USDA and is set to create the Cardano Decentralized Finance (DeFi) ecosystem healthier and more sustainable.
USDA: Cardano’s Fully Fiat-Backed, Regulatory-Compliant Stablecoin
According to Emurgo, the official commercial arm and one of the founding entities of the Cardano blockchain, the stablecoin USDA is scheduled to launch in 2023. The company’s first product in its “Anzens” suite of products aims to bridge the gap between traditional finance (TradFi) and DeFi. USDA is set to embark exclusively on the Anzens platform next year where users can tokenize their USD into USDA via credit or debit cards, wire transfer or conversion of Cardano’s native ADA token. The broader plan also includes lending and borrowing services, crypto-based card payments, and bridges between traditional markets and decentralized applications (dApps).
Emurgo recently announced a partnership with an undisclosed US-based financial services firm that will serve as the stablecoin’s banking partner and ensure that the USDA is regulatory compliant. The USDA’s backing of real-world assets will help to create strong and long-term price stability which could eventually lead to more reliable financial services for the Cardano ecosystem.
Emurgo’s Fintech Managing Director, Vineeth Bhuvanagiri, said that introducing a fully fiat-backed, regulatory-compliant stablecoin is the next step in realizing the community’s future.
USDA Leverages The Stability Of The U.S. Dollar
The new stablecoin, which is pegged 1:1 to the U.S. dollar, the world’s reserve currency, is powered by the Cardano blockchain designed to safeguard Web3 companies, protect consumers from crypto market volatility, and unlock fast global transactions.
In addition to USD, Emurgo will soon enable the conversion of other stablecoins such as USD Coin (USDC) and Tether (USDT). The company plans to eventually swap cryptocurrencies such as Bitcoin (BTC), Ether (ETH), and other cryptocurrencies.
The collapse of the algorithmic stablecoin TerraUSD in May demonstrated that a dollar-backed stablecoin will help to reduce the uncertainty around algorithmic stablecoins. With the recent optimistic development of Cardano, it could also help boost ADA’s price to the much coveted $1 price mark. At the time of writing, ADA is trading at $0.3076 with a market capitalization of $10.6 billion.