TrustToken (the first public investment from a16z crypto) is now looking for new public investments from accredited investors on CoinList, pitching a new dollar-backed token that offers cryptocurrency traders a new way to move their investments across volatile exchanges.
TrueUSD offers token-holders full collateral, regular attestations of escrowed balances, and legal protections against misappropriation of underlying USD.
The company’s first token is TrueUSD, a stablecoin that is redeemable 1-for-1 for U.S. dollars. In its first few months of trading, speculative investors that are looking for new systems of security have boosted the coin’s market price to more than $85 million. There’s a $61 million hard cap on the token allocated over three tranches at $0.12, $0.14 and $0.16 per trust token.
Other investors in TrustToken’s initial $20 million pre-sale include BlockTower Capital, Danhua Capital, GGV Capital, Jump Capital and other undisclosed investors.
As it expands its investor base to include accredited investors, the TrueUSD currency is also extending its reach, with an agreement between the company and HitBTC to list the stablecoin as an established currency. The company maintains that the TrueUSD coin can be used as a stalking horse to secure investments in Ethereum, Bitcoin, Tether, Bitcoin Cash, Litecoin, Monero, 0x and NEO.
Using TrueUSD’s system, dollars are held in escrow accounts of multiple trust companies and not in a bank account. Those accounts are verified by an independent third party who will issue monthly reports on the number of dollars held in collateral.
A buyer of TrueUSD needs to pass a KYC and AML check and then can send dollars to one of TrueUSD’s trust company partners. Once verified, the TrueUSD smart contract issues tokens on a one-to-one ratio before sending them off to a buyer. Prime Trust, a Las Vegas-based company provides all of the financial services as of now.
“The users of this space are really the traders,” says TrustToken co-founder and chief executive Danny An. “They want a native crypto asset that’s stable. They want to be able to hedge against volatility.”
He also maintains the company does have a broader vision than just helping traders secure speculative assets so they can come up with even more arcane financial instruments. “For the entire crypto-economy to work, a lot of people believe that a stablecoin or multiple stablecoins need to be created,” An said.
TrustToken makes money whenever its coins are minted or burned. “Whenever USD is involved we take a small cut,” which is 10 basis points per transaction, he said.
Essentially, TrustToken wants to tokenize all real-world assets, like any other alt-coins. And one of the most lucrative markets for them at the moment is real estate. “There is $200 trillion dollars of real estate that is offline,” said An. Tokenizing those assets would create more wealth in the world overall, he said. “Assets that are not liquid are not as valuable as assets that are liquid,” he asserts.
It’s obviously different from the work that An and his co-founders Rafael Cosman and Stephen Kade were earlier doing at Kernel — a company that was developing technologies to create neural interfaces between humans and machines. However, it definitely opens up interesting prospects.