The Gemini cryptocurrency exchange, owned by Tyler and Cameron Winklevoss, has burned roughly 20% of the total supply of its Gemini Dollar (GUSD) stablecoin.
The move was spotted by Whale Alert, a Twitter bot tracking large transactions on the blockchains of some of the most popular cryptocurrencies. The token burn is likely related to an institution cashing out their funds, and marks the steady decline of the supply of GUSD in the space.
The stablecoin was launched back in September of last year, at about the same time another stablecoin called Paxos Standard (PAX) was launched. Both cryptocurrencies have been approved by the New York State Department of Financial Services (NYDFS) and are subject to the regulator’s strict requirements.
The stablecoin, as most other stablecoins, is backed 1:1 by the U.S. dollar and its reserves are reportedly kept on a bank in the United States. The deposit balances are audited monthly by BPM, one of the largest California-based accounting and consulting firms in the country.
This helped its popularity grow quickly soon after launch, so much so within months GUSD’s marker cap was of about $90 million. Traders soon started cashing out and trading volumes dropping, as since then GUSD in circulation has been on a steady decline, to its current 4.08 million tokens.
GUSD’s downfall is likely related to the amount of stablecoins it has had to compete with. Besides PAX, it also competes with Tether’s USDT, Circle’s USDC, Maker’s DAI, TrueUSD (TUSD), and Binance’s BUSD, among others.
As CryptoGlobe reported two reputable over-the-counter (OTC) trading desks have allegedly claimed that once they attempted to cash out a large sum of GUSD, they were “warned by Gemini staff that redeeming millions of dollars would harm the stablecoin.” Some trading desks claimed their accounts were even closed following large withdrawals, forcing others to feel reluctant to attempt large withdrawals.
Featured image via Pixabay.