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While the Bank of Canada reportedly backs the issuance of a digital Canadian Dollar, private alternatives are increasingly permeating the space.
VersaBank (TSX: VB), a digital bank based in Canada has unveiled plans to launch a stablecoin dubbed the VCAD and pegged to the Canadian Dollar. The proposed digital token is described as the first of its kind to be issued by and backed by deposits lodged with a North American or a Canadian bank.
The VCAD is a stablecoin that will maintain stability with the CAD, on a ratio of 1 to 1. It is the product of the partnership between VersaBank and Stablecorp, a joint venture spunned by Canada’s leading crypto asset manager, 3iQ, and Mavennet, a North American leader in blockchain development. The origination of the new token gives it a good reputation per stability with its pegged fiat currency, and it is deemed secure, drawing from its cryptographic infusion while it was being designed.
“As North America’s first bank-issued “stablecoin”, VCAD offers consumers and businesses the ability to adopt and leverage the benefits of digital currency and blockchain-based assets without the volatility of traditional currencies, alongside the security of a value-backed asset that the cryptocurrency world has long demanded,” said David Taylor, President of both VersaBank and its cyber security subsidiary, DRT Cyber. “Consumers and businesses purchasing products and services with VCAD will finally know the precise value of their digital currency when executing these transactions.”
VCAD will be minted and issued by VersaBank to financial or industry intermediaries in exchange for Canadian dollar deposits through the use of the Bank’s “smart contracts.” These partner institutions will be tasked with the distribution of the stablecoin to final users based on request. Once issued, the tokens can easily be redeemed for the fiat equivalent at any time.
Demand for Canada-based Versabank Stablecoin Not a Question
The world is changing, and the search for alternatives to fiat currencies is increasing. The use of Bitcoin (BTC), Ethereum (ETH), and stablecoins like Tether (USDT) is becoming commonplace in the crypto ecosystem.
Authorities have frowned at Bitcoin and its cohorts in usurping the financial terrain, however, mild tolerances for stablecoins still exist. While the Bank of Canada reportedly backs the issuance of a digital Canadian Dollar, private alternatives are increasingly permeating the space. With the demand for cashless and crypto-related digital currencies, the adoption of VCAD may come without any hassles.
“VCAD provides consumers with not only the security afforded by an underlying deposit with a Canadian chartered bank but also the comfort of knowing that each VCAD issued or redeemed will always have one-to-one value with the Canadian dollar. With such clear benefits, we are highly confident in the demand for VCAD as digital currencies increasingly become part of mainstream financial transactions,” said Jean Desgagne, CEO, Stablecorp.
Besides VCAD, VersaBank hopes to pioneer the roll-out of VUSD and VEuro stablecoins that will be backed by the United States Dollar and Euro deposits respectively.