TrustToken, the San Francisco-based startup behind trueUSD (TUSD), a cryptocurrency pegged to the U.S. dollar, has just completed a $20 million strategic funding round. Investors include Andreessen Horowitz’s Crypto Fund, BlockTower Capital, Danhua Capital and GGV Capital.
The funding signals that heavyweight venture capital firms believe in TrustToken’s potential. It also may indicate that , cryptocurrencies designed to have price stability, will become a big battleground in the crypto space.
Most stablecoins get their price stability by being pegged to the dollar although the backers of some of these coins intend to transition to a basket of currencies or an index (like the consumer price index) in the future, .
As TrustToken works on tokenizing other assets, its executives say they hope to make it easier for everyone to gain easy access to a variety of currencies and commodities.
TrustToken launched trueUSD in March, and the coin now has a market cap close to $50 million, . The company says it holds fiat money as collateral for its coins in escrow accounts that are accessible to third-party fiduciary partners. The coins are available for trading on global exchanges such as Binance, Bittrex and Upbit.
Linking Cryptocoins to a Slew of Assets
But the company has broader plans because its asset tokenization platform can be used to create cryptocurrencies linked to other traditional assets including gold, silver, oil and rental properties.
“The raise will support the development of the TrustToken asset tokenization platform and expansion of its legal, partnership, product and engineering departments,” TrustToken CEO Danny An tells ThirtyK.
The capital will also go toward hiring, with TrustToken’s highest priority being front-end and full-stack web developers and security engineers.
“We’re excited about firms such as Andreessen Horowitz, BlockTower Capital, Danhua Capital and GGV Capital participating in this strategic round because of the combined expertise and network they provide as we grow our industry partnerships,” An says. “They will also help extend the adoption of our first product, trueUSD.”
The Big Daddy of Stablecoins
The incumbent dollar-pegged stablecoin is tether (), which is sold on the Hong Kong-based cryptocurrency exchange Bitfinex. There are $2.62 billion worth of tethers in circulation, , and Tether, the company, claims each of its coins is backed by one dollar. But as , the company hasn’t been publicly audited, fueling speculation that not all of its coins are backed by hard currency. Tether and Bitfinex received lots of attention last week after a university researcher with a track record of sniffing out financial fraud saying issuance of tether was linked to the propping up of bitcoin prices during the No. 1 cryptocurrency’s mammoth rally last year.