The Gemini Dollar (GUSD) is an older and popular stablecoin many people are unfamiliar with.
For example, the Gemini Dollar was CoinMarketCap’s 78th ranked cryptocurrency on 7 April 2023. CoinMarketCap gave Gemini a $508.191 million Market Capitalization, a $612.274 million Fully Diluted Market Cap, and a $1 Coin Price on 7 April 2023.
Additionally, the Gemini Dollar had a $556,680 24-Hour Market Volume, a $521,778 Centralized Exchange (CEX) Volume, and a $49,484 Decentralized Exchange (DEX) Volume on 7 April 2023. They based those numbers on a 607.05 million GUSD Circulating Supply and a 611.140 million GUSD Total Supply.
What is the Gemini Dollar?
The BPM Accounting firm claims Gemini Trust Company LLC had total reserves of $563.570 million in February 2023.
The Gemini Trust Company is the organization that backs the Gemini Dollar (GUSD) with US dollars. To explain, the Trust Company maintains bank accounts that contain US dollars.
When you spend a Gemini Dollar. A smart contract in the GUSD stablecoin makes payment in US dollars from the Trust Company’s accounts. Gemini claims they hold each dollar in a Federal Deposit Insurance Corporation Insurance (FDIC) insured bank.
Is the FDIC Insuring Stablecoins?
Frighteningly, FDIC insurance may not protect GUSD. To explain, the FDIC only insures bank accounts for up to $250,000. BMD estimates Gemini had $563.57 million in reserves in February 2023.
To explain, the FDIC violated its own policy and bailed out all the accounts at two large institutions, Silicon Valley Bank and Signature Bank, on 13 March 2023. Notably, Silicon Valley Bank and Signature bank host many crypto-business accounts. For example, USD Coin (USDC) issuer Circle had $3.3 billion in cash reserves in Silicon Valley Bank accounts.
I think the FDIC is now insuring business accounts over $250,000. To elaborate, the FDIC circumvented the law (and Congress) by organizing a “bridge bank” to operate Silicon Bank until they could find a buyer. The FDIC has sold Silicon Valley Bank’s assets to bottom-feeding financial institution First Citizens Bank (FCNCA).
Thus, the FDIC is now insuring some stablecoins, including Gemini Dollar (GUSD) by insuring or backstopping some back accounts. In particular, I think the FDIC is now willing to nationalize some banks. Hence, the Gemini Dollar could become safer and more valuable thanks to the FDIC.
How Stable is the Gemini Dollar (GUSD)?
The Silicon Valley Bank crash shows the Twins’ policy of keeping reserves in FDIC insured banks is a smart move. The FDIC is now insuring all accounts at some banks, regardless of size. That gives the GUSD an added layer of safety.
Mr. Market seems to agree with this thesis. For example, the GUSD’s Coin Price fell to 97.9₵ at the height of the Silicon Valley Bank panic. The Coin Price rose to $1.077 on 13 March 2023 and $1 on 7 April 2023. Hence, Mr. Market retains faith in the Winklevoss Twins, although the media has lost that faith.
I think GUSD is an interesting stablecoin with an added layer of value because of the FDIC’s willingness to insure more bank accounts. Speculators seeking a Tether (TUSD) alternative need to examine the Gemini Dollar (GUSD).
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