Financial technology company Figure Technologies is seeking approval from US regulators to introduce an interest-bearing stablecoin.
Founded by former SoFi Technologies CEO Mike Cagney, if successful, Figure will become the first company to offer a stablecoin regulated as a security within the United States, Bloomberg reported Monday.
In October, Figure filed a draft registration statement with the Securities and Exchange Commission (SEC) under the subsidiary name Figure Certificate Co.
The registration filing reveals that Figure plans to register the stablecoin as “face-amount certificates,” a type of fixed-income security, and intends to issue it using blockchain technology.
Upon approval, the stablecoin will be available to both retail and institutional investors in the US.
Figure Markets Seeking to Raise $50 Million
Figure Markets, the digital asset arm of Figure, is reportedly seeking to raise $50 million at a valuation of $250 million, excluding the amount raised.
Jump Crypto is potentially being considered as a lead investor for this funding round, although both Figure and Jump declined to comment on the matter.
Currently, the market for stablecoins, which are tokens pegged to assets like the US dollar, is largely dominated by Tether Holdings Ltd.’s USDT, with $95 billion in circulation, followed by Circle Internet Financial’s USD Coin.
These stablecoins do not offer interest and are primarily used by cryptocurrency traders for settling transactions or transferring assets between exchanges.
Many issuers of stablecoins outside the US have refrained from offering interest-bearing products in the country due to concerns about potential SEC regulations classifying them as securities.
Figure, on the other hand, anticipates that its stablecoin will be viewed as an alternative to existing stablecoins for payments and transaction settlements, according to the filing.
The company believes that purchasers may be interested in an instrument that provides yield backed by highly liquid, investment-grade assets, which can be held in a digital format, liquidated quickly, and used for peer-to-peer transactions.
Figure’s Stablecoin Redeemable at 1 Cent Per Certificate
Unlike most stablecoins that are pegged at a 1:1 ratio with the US dollar, Figure’s stablecoin will be redeemable at a value of 1 cent per certificate.
This means that a $1 payment will require the transfer of 100 certificates.
Interest will accrue daily and be paid monthly to the stablecoin holders.
The filing states that the interest will be derived from reserves consisting of treasury securities, commercial paper, corporate debt, and other assets. Holders will need to complete a know-your-customer process to sign up and obtain the stablecoins.
It should be noted that approval for Figure’s proposal is not guaranteed, and the application process is likely to intensify debates on how stablecoins should be regulated in the US.
While previous attempts by US lawmakers to introduce bills on stablecoins have been unsuccessful, the sector’s oversight has been identified as a priority by President Joe Biden.
Circle, another major player in the stablecoin market, recently filed confidentially for an initial public offering, more than a year after canceling its plans to go public through a blank-check deal.
In addition to the interest-bearing stablecoin, Figure is also filing for the registration of an investment offering called Figure Installment Certificates.
This product aims to cater to investors interested in earning yields while holding digital assets.