Blockchain Startup Figure Seeks SEC Approval for Interest-Bearing Stablecoin

• Figure Technologies aims to become the first to introduce an interest-bearing stablecoin in the US.
• Figure Markets, the digital asset arm of Figure, also plans to secure $50 million in funding for its operations, signaling the company’s strategic focus on advancing digital asset initiatives.

Figure Technologies Inc., a blockchain and lending startup is actively seeking regulatory approval from U.S. authorities to introduce an interest-bearing stablecoin. This groundbreaking move represents an innovative effort to establish a new category of stablecoins with federal legitimacy. If successful, Figure will pioneer the issuance of the first stablecoin regulated as a security in the United States.

In October, Figure filed a draft registration statement with the Securities and Exchange Commission (SEC) under its subsidiary, Figure Certificate Co. The submission outlines Figure’s intent to register the stable coin as “face-amount certificates,” categorized as fixed-income securities, and proposes to utilize blockchain technology for issuance. Upon approval, this stablecoin will be accessible to both retail and institutional investors in the U.S.

Figure Markets, the digital asset arm of Figure, is concurrently planning to secure $50 million in funding at a valuation of $250 million, excluding the amount raised. Jump Crypto is reportedly in the race as a potential lead investor. Figure will allocate the funds raised to support the operations of Figure Markets, signaling the company’s strategic focus on advancing its digital asset initiatives.

Figure Challenges Stablecoin Landscape with Interest-Bearing Offering

In a bold move, Figure Technologies Inc., a blockchain and lending startup, is set to disrupt the stablecoin market by seeking approval for its interest-bearing stablecoin in the United States. Currently, Tether Holdings Ltd.’s USDT dominates the stablecoin market with $95 billion in circulation, followed by Circle Internet Financial’s USD Coin. Furthermore, crypto traders use these leading stablecoins primarily for transaction settlements and asset transfers, lacking an interest-bearing feature.

Figure aims to position its offering as a compelling alternative for payments and transaction settlements, as revealed in the filing. The unique feature of Figure’s stablecoin lies in its redeemable value at 1 cent per certificate, requiring the transfer of 100 certificates for a $1 payment—deviating from the conventional $1 peg of most stablecoins. The interest on these stablecoins will accrue daily and be distributed monthly to holders, adding an income-generating aspect to digital assets.

Notably, Figure’s stablecoin will derive interest from reserves comprising treasury holdings, commercial paper, and corporate debt, among other assets, according to the filing. To obtain these interest-bearing stablecoins, purchasers must undergo a know-your-customer (KYC) process during the sign-up procedure.

Navigating the U.S. Regulatory Challenges

While numerous interest-bearing stablecoins are available globally, the reluctance of many issuers to introduce such products in the United States is amid concerns that the Securities and Exchange Commission (SEC) might classify them as securities.

The likelihood of approval remains uncertain, and the application process is likely to fuel discussions on the appropriate regulatory framework for stablecoins in the US. Despite several unsuccessful attempts by US lawmakers to propose stablecoin-related bills, President Joe Biden has stressed regulatory oversight for stablecoins. Circle has recently confidentially filed plans for an initial public offering, marking a renewed effort after abandoning its previous attempt to go public through a blank-check deal over a year ago.

Figure is also submitting an application to register an investment-focused offering, known as Figure Installment Certificates. This new offering aims to attract investors seeking yields while holding assets in a digital format, as outlined in the filing.

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