The Stablecoin Accounts Can Be Frozen, Custodian Has The Ability
Stablecoin Gemini Dollar (GUSD), released by brothers Cameron Winklevoss, Tyler Winklevoss, has made a lot of noise among the cryptocurrency community. GUSD was presented as a tool for the spread of cryptocurrency in wide financial circles, but then it turned out that its technical characteristics were not as unambiguous as it had seemed at first glance.
Gemini can freeze assets on the GUSD network at any time
Alex Swan posted an article in the Good Audience blog, in which he analyzed the code of GUSD and came to the conclusion that this stablecoin, unlike bitcoin, was not a decentralized cryptocurrency. For example, Gemini exchange – GUSD custodian – can freeze any of stablecoin accounts at any time.
The researcher notes that GUSD uses the ERC20Proxy contract, with which Gemini can generate an infinite number of tokens, update its contract every 48 hours and disable the ability to transfer coins.
The whitepaper Gemini Dollar says that the issue of a dollar-linked cryptocurrency, which is stored centrally, requires trust and supervision.
The stablecoin accounts should be monitored by regulators to enlist the confidence of the investors. And their licensing condition is full transparency and the ability to check it at any time.
“Gemini operates under the direct supervision of the New York State Department of financial services. Accordingly, the exchange complies with all requirements of the New York state banking services act, as well as meets all regulatory requirements of the United States,” the document says.
The regulator will monitor the provision of the stablecoin with the US dollar. Besides, Gemini stablecoin accounts can be frozen, and it is obliged to prevent and limit all operations with the coin, which may be illegal. Probably, the ability to stop operations with GUSD at any time is also a requirement of the financial services department of the state of New York.
The first platform on which Gemini Dollar will start trading will be the Chinese exchange Bibox. According to CoinMarketCap, the trading platform has a daily trading volume of $200 million and ranks 10th in the ranking of cryptocurrency exchanges. Starting from Friday, Bibox users can enter and output GUSD, and from September 16, it will be possible to trade ETH/GUSD and BIX/GUSD pairs.
Let’s recall that the Winklevoss Brothers launched a new centralized stablecoin Gemini dollar on Monday, September 10, after the approval of the proposal by the New York Department of financial services. GUSD is based on the ERC20 standard of the Ethereum network, backed by US dollars, and the tokens themselves are stored in an insured FDIC Bank account.