Tyler and Cameron Winklevoss have won U.S. regulator approval for a dollar-pegged cryptocurrency.
The New York Department of Financial Services (NYDFS), a Wall Street regulator, green-lit the Winklevoss’s application for the so-called stablecoin on Monday morning. The virtual tokens are designed to hold a fixed value; in this case, they are pinned to the value of the U.S. dollar.
The Winklevoss twins worked on the bid through their cryptocurrency exchange, Gemini, for more than a year, they told Fortune on a call. With NYDFS’s blessing secured, they plan to make the stablecoin available immediately, they said.
“Unlike U.S. equities that might trade 9-to-4, five days a week, this is a 24-7-365 asset class,” said Cameron, Gemini’s president and cofounder, referring to cryptocurrency’s all-hours markets. He likened the development to the world’s transition from snail mail to email.
The new stablecoin, Cameron said, “is effectively a way to link the world to the world of digital assets and to allow fiat currency to move on a blockchain the same way digital assets move.”
State Street, the centuries-old financial services firm based in Boston, is set to provide backing for the stablecoin, called Gemini Dollar, with one-to-one cash reserves, documents obtained by Fortune indicate. The auditor is set to be BPM, an accounting firm based in Calif.
In addition to Gemini Dollar, NYDFS granted its blessing to a stablecoin created by Paxos, the trust company behind ItBit, an online cryptocurrency exchange. That one is called Paxos Standard, and it is set to be audited by Withum, a New Jersey-based accounting firm.
The NYDFS’s decision to approve the stablecoin signifies another step into the mainstream for the cryptocurrency industry, which is best known for unpredictable price swings and legal uncertainties. The price of Bitcoin, for example, has collapsed by roughly two-thirds since approaching all-time highs near $20,000 per Bitcoin in December, and regulators continue to reject Bitcoin ETF applications.
“As the financial technology marketplace continues to evolve, New York is committed to fostering innovation while ensuring responsible growth,” said Maria T. Vullo, NYDFS superintendent, in a statement. “These approvals demonstrate that companies can create change and strong standards of compliance within a strong state regulatory framework that safeguards regulated entities and protects consumers.”
Today the most popular stablecoin is Tether, a controversial token managed by Tether Limited, an off-shore firm that critics say operates too opaquely. The company behind the token has faced allegations of price manipulation, and its relationship with an auditor broke down earlier this year. (Tether later employed a law firm to track its accounts.)
“A viable stablecoin has to solve for the trust problem,” said Tyler, Gemini’s CEO and cofounder, on a call with Fortune. “The regulatory oversight ensures that we’re doing what we say we’re doing.”
Gemini Dollar and Paxos Standard are both ERC-20 compliant tokens, meaning that they were built to run on top of Ethereum, the second-most valuable cryptocurrency network next to Bitcoin.
A number of other companies are also looking to develop cryptocurrencies pegged to fiat currencies. IBM is testing a stablecoin on Stellar, a public blockchain. Bitmain, a Chinese Bitcoin mining giant, is exploring stablecoins alongside a strategic partner, Circle, one of the most valuable cryptocurrency startups in the U.S. And Basis, another startup, raised $133 million from Bain Capital Ventures and other investors to create an algorithmically-managed stablecoin earlier this year.
Whereas Bitcoin has found a home as a store of value—a kind of digital gold—as well as an instrument of speculation, stablecoins aim to provide a reliable medium of exchange to make payments and trades. As more stablecoins enter the market, they may help to help smooth out price disparities between global exchanges, advocates say.
“We think the obvious initial use case is for professional market makers using it to help them arbitrage,” Cameron said of Gemini Dollar. The tokens could be used to power various decentralized apps down the line, he said.
