US Patent Granted to Stablecoin Concept Backed by Government Debt

There’s plenty of stablecoins pegged to assets like fiat currency and gold. But now, a U.S. patent has been granted to one stablecoin concept that will be backed by government debt such as treasury notes and bonds.

Yuga Coin intends to be the first of its kind. Unlike fiat-pegged stablecoins, Yuga will be globally backed by treasury instruments and incorporate regulatory approved identity verification standards.

As reported by CoinDesk:

The two co-founders of the Puerto Rico-based digital FV Bank say they have become the first in history to be awarded a U.S. patent for a stablecoin design based solely on government debt.

The patent application, filed last year on the back of a pre-existing patent by Nitin Agarwal and Miles Paschini, describes their instrument as a “tokenized crypto asset backed by sovereign debt.”

Its working name is Yuga Coin, which in Sanskrit means the “joining of two things,” or in this case, “generations,” Agarwal told CoinDesk in an interview on Tuesday.

“We aim to create multiple stablecoins that are government-friendly, know-your-customer (KYC), anti-money laundering and Financial Action Task Force (FATF) compliant based on different currencies,” Agarwal said.

Each coin will be redeemable 1:1 against a corresponding national currency where they will be backed by national treasury instruments (including bonds and Treasury notes) of the corresponding country.

Those stablecoins, intended to be created under the same Sanskrit banner and denominated in U.S. dollars or euros at first, would be traded in a controlled network adjusted to rate the risk of trading with particular counterparties.

The argument goes that these would be more stable than other cryptos pegged to a fiat currency because they won’t rely on a single financial institution holding the collateral. “The stability of the tokenized crypto asset is more akin to the stability of the government debt,” the patent reads.

While the market is now flooded with various versions of stablecoins pegged to either commodities or fiat currency (think USDT and USDC), the competition for such an instrument pegged to government debt is scarce.

Read the full article at coindesk.com.

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