The owners of the Gemini cryptocurrency exchange, the Winklevoss brothers, have won a flurry of U.S. patents for the development of a technology behind a stablecoin which, they claim, could be issued by commercial banks.
Six patents, awarded between August 2019 and January 2020 to the intellectual property company of Tyler and Cameron Winklevoss, outline a system, similar to the collateralized token model already used by Tether and the brothers' Gemini dollar (GUSD), which allows users to directly exchange legal currency for their digital equivalents.
A quick look at patents
The stablecoin system requires "trusted entities" in charge of generating, exchanging and destroying the stablecoins, as well as guaranteeing a exchange in fiat currency with a stable 1: 1 ratio with respect to the tokens issued.
A trusted entity could be the same Gemini exchange, says the patent, but "other types of trusted entities (eg Banks, trusts, etc.) may possibly be used to issue, administer, redeem and / or otherwise manage ”The stablecoins.
One of the patents, the one awarded on January 21, describes one way in which such entities, like banks, can create and issue new tokens quickly and efficiently. Trusted entities may also be allowed to charge users a "processing fee" for minting stablecoins.
The patents also describe a means by which stablecoins could be used as collateral "in financial transactions performed via smart contracts". Another suggests that dividends from securities and other similar instruments could be paid in stablecoin.
Last summer, Gemini applied for a US broker-dealer license that would allow customers to buy digital securities and receive dividends, all in GUSD. The stablecoin, launched in September 2018, has been approved by the New York Department of Financial Services (NYDFS).
The suppliers of the GUSD stablecoin already use banks to hold customer funds. Headquartered in Boston, State Street acts as a custodian offering USD guarantees in support of the Gemini dollar.
In December, the bank announced that it would partner with the Gemini exchange to examine possible scenarios that develop around cryptocurrencies. "Our patent covers the unique way the Gemini dollar smart contract interacts with the Gemini exchange," Gemini communications manager Carolyn Vadino told CoinDesk. "Our patents protect the investments we make in the research and development of our products."
Given the embodiments of patents, it may be possible that the system is being considered for licensing to banks or other financial institutions. Furthermore, it is not clear whether Gemini would use the existing GUSD currency or the custom tokens based on the same technology.