Jewel Bank in Bermuda, has formed a partnership with the technology firm Polygon to launch a stablecoin backed by U.S. dollars.
According to Jewel Bank founder and chairman Chance Barnett, institutions in Bermuda will soon be able to trade real-time settlements using a stablecoin pegged exactly to the US dollar.
The first stablecoin to be made available in the region is called Jewel USD (JUSD), and it runs on the Polygon blockchain, allowing transactions between wallets accessible to institutional clients.
The bank intends to utilize the Polygon ecosystem in the future for commercial and retail stablecoin-based payment solutions, including exchanges between institutions, businesses, and individuals as well as transactions between institutions and businesses.
“The need for a USD real-time settlement network outside of the U.S. is significant for both fintechs and digital asset firms, so we’re filling a large gap in the market,” said Barnett. “The U.S. has solutions like Signature Signet for real-time settlement, and now Jewel Bank is providing a Bermuda-based non-U.S. solution for the industry, and the response by clients in signing up prior to launch has been significant.”
25 stablecoins, including a fake euro token, a Japanese stablecoin linked to the yen, and a South African stablecoin fixed to the rand 1:1, are now traded on the Polygon network.
The bank stated that even though a precise launch date has not been determined, it should occur soon. According to Jewel, bank-level audits and regulatory control of the stablecoin’s operations and reserves would be conducted, with updates provided on a monthly and quarterly basis.
“The stablecoin is directly issued by the bank, not a lesser regulated entity that doesn’t directly hold USD fiat deposits/reserves the way a bank can. This reduces risks for stablecoin holders,” commented Barnett, also stating: “JUSD transactions will only be possible between permissioned clients/wallets, eliminating the ability for bad actors to use these assets for any unsanctioned activity. Jewel may seek to open up its stablecoin to non-clients in the future.”
Bermuda has been encouraging the business of digital assets in an effort to maintain its relevance as a financial jurisdiction. The territory announced a collaboration with stablecoin platform Stablehouse in 2020 to launch a pilot program for a digital “stimulus” token that would target both locals and business owners.
“With a plan to develop into an international center for digital assets business, in 2018, Bermuda created regulatory clarity and a legal framework for both digital assets and banking. […] Meanwhile, the U.S. and other leading economies and their regulatory bodies have yet to provide similar clarity and holistic frameworks for digital assets and digital asset businesses,” claimed Barnett.
As of June 2022, the Bermuda Monetary Authority had awarded 14 licenses to cryptocurrency companies, four of which were issued in 2022.
