Early in 2023, USDA, a stablecoin pegged to the United States, will be released by Emurgo, the Cardano blockchain's official commercial arm and a founding organization.
The first stablecoin in the Cardano ecosystem to be fully fiat-backed and compliant with regulations is USDA.
Vineeth Bhuvanagiri, the managing director of Emurgo Fintech, wrote in a note:
“The introduction of a fully fiat-backed, regulatory-compliant stablecoin is the next step in realizing the future for our community.”
Stablecoins are digital currencies that are backed by one or more assets and are linked to fiat money like the dollar. They give traditional market participants access to the cryptocurrency market and are widely used throughout the ecosystem as trading, borrowing, and lending tools.
The USDA product is a component of Emurgo's Anzens program, a larger scheme that would provide customers with a range of financial services and products based on Cardano-based assets. These programs include card payments using cryptocurrency, lending and borrowing services, and connections between established marketplaces and decentralized applications (dapps).
This would strengthen Cardano's decentralized finance (DeFi) ecosystem, which, according to DeFiLlama data, locks a little over $53 million in value as of Friday. Since March highs of almost $300 million, that is an 82% decline.
Users will be able to tokenize their USD into USDA via credit/debit cards, wire transfers, or conversion of Cardano's native ADA token when USDA launches on the Anzens platform in Q1 2023, according to Emurgo.
In order to ensure USDA is fully compliant and follows regulatory rules, Emurgo said it has worked with a licensed financial services organization with headquarters in the United States as the banking partner.
With a long-term goal of enabling conversion and swaps of cryptocurrencies like bitcoin (BTC), ether (ETH), and other cryptocurrencies, Emurgo will soon enable the tokenization of USD along with the conversion of other stablecoins, such as USD Coin (USDC) and tether (USDT), to USDA.
The action was taken after Emurgo announced months earlier that it would invest $200 million in the Cardano ecosystem over the next few months to boost network participation. This announcement was made on the sidelines of Singapore's Token2049 conference.