BitGo To Launch Rewards-Based Stablecoin USDS In January 2025

According to CoinDesk, BitGo is set to introduce a new dollar-backed stablecoin named USDS in January 2025. Announced at Token2049 in Singapore, this stablecoin aims to stand out in the competitive market by offering rewards to institutions that provide liquidity to its network. USDS will be backed by short-duration Treasury bills, overnight repos, and cash, similar to other stablecoins. BitGo describes it as the first open-participation stablecoin. CEO Mike Belshe explained that the goal is to create a more open and fair system that promotes innovation and rewards those who build the network. He emphasized that a stablecoin’s value comes from its users, the liquidity they provide, and the access points for interchange. Stablecoins are cryptocurrencies pegged to assets like fiat currency or gold to stabilize their price. They are widely used in crypto trading and provide most of the liquidity in decentralized finance (DeFi). The market is currently dominated by Tether's USDT and Circle's USDC. BitGo's USDS will differentiate itself by distributing a portion of the returns generated from its reserves to the institutions providing liquidity. Belshe clarified that this approach avoids classifying the operation as an investment contract since the proceeds are not distributed to end users but to the liquidity-providing institutions. Other stablecoins have attempted to create yield-bearing stablecoins and reward end users but have faced regulatory challenges, particularly in the U.S. BitGo plans to list USDS on all major exchanges and aims to have $10 billion in assets held within the stablecoin by this time next year.