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Academy > Crypto Insights > What Is TrueUSD (TUSD)? A Regulated USD-Backed Stablecoin >

What Is TrueUSD (TUSD)? A Regulated USD-Backed Stablecoin

2022-03-31 10:28:24

TrueUSD (TUSD) is a fiat-backed stablecoin that operates on multiple blockchain networks including Ethereum (ETH), Tron (TRX), Polygon (MATIC), Avalanche (AVAX), and others. The TUSD coin is pegged 1:1 by US dollars and the market cap is $1.5 billion dollars. The circulating supply is 1.5 billion TUSD.

TrueUSD launched in March 2018 with the intention of creating a stablecoin that would be fiat-backed. Users can deposit their TUSD on the TrustToken platform and redeem it directly to their bank accounts using wire transfers. TrueUSD is a registered entity that belongs to the TrueCoin LLC and is compatible with all laws and regulations in the United States and internationally.

trueusd

The TrueUSD coin was launched on the Tron network, but it expanded to other networks to make it more accessible for DeFi (decentralized finance). TrueCoin LLC also issued TGBP, TCAD, and TAUD respectively. There are plans to issue TEUR and THKD in the future – all users will be eligible for bank wire transfer redemptions the same as TrueUSD.

TUSD is now available on Phemex:

Summary: 

  • Stablecoins are crypto coins pegged to the value of fiat currency such as 1:1 to USD or 1:1 to EUR.
  • Stablecoins are used in the crypto industry to mark the underlying value of the currency. For example, BTC/USDT is a pair between Bitcoin (BTC) and Tether (USDT).
  • A stablecoin is not the same as the real dollar, but it’s a virtual cryptocurrency. They can be minted virtually at no cost, therefore backing is important.
  • TrueUSD is a fiat-backed stablecoin that exists since March 2018. It was launched on Tron as a TRC-20 coin and has expanded to a dozen different blockchains.
  • TrueUSD provides dollar backing for every TUSD minted in existence. It belongs to a registered and regulated entity called TrueCoin LLC.
  • TrueCoin LLC is compatible with the Financial Crimes Enforcement Network (FinCEN) and requires KYC (Know Your Customer) for withdrawals.
  • The TrustToken App allows users to deposit TUSD and exchange it for fiat dollars on a 1:1 basis by withdrawing to their bank account using wire transfers.
  • Phemex users can deposit and withdraw TUSD on our platform directly: USDT/TUSD.

The TrustToken App offering fiat dollar exchange for TUSD

The TrustToken App offering fiat dollar exchange for TUSD.

What Is TrueUSD (TUSD)?

TUSD is a crypto stablecoin used for trading and storing value. If a trader makes a successful trade and wants to cash out, TUSD will offer them the full dollar value without volatility. Exchanges that enable trading such as centralized (CEX) and decentralized (DEX) exchanges both prefer to use crypto stablecoins pegged to the dollar instead of using fiat currency.

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Stablecoins are great for instantly settling transactions. Traders can easily get in and out of trades using stablecoins without waiting for wire transfers that can take 1-2 business days on average. Before stablecoins existed, users had to trade one currency for another (i.e. Bitcoin for Ethereum) or they had to sell it for cash in real life.

If a trader wants to sell a Bitcoin at $40,000 they need an exit currency that would allow them to obtain the full value of their Bitcoin. Therefore, a trader could obtain $40,000 USDT for their Bitcoin on Phemex and convert that to TUSD easily. The TrustToken App could then help them transfer their money to their bank account.

TrueUSD offers the advantage of having fiat backing as opposed to crypto backing or arithmetic backing. When a trader holds $100 of TUSD, they can redeem that for the full amount in their bank account.

TUSD vs. USDT

If we compared TrueUSD vs USDT, TrueUSD has an advantage because it’s fully fiat-backed while USDT is partially crypto-backed. Likewise, TrueUSD vs USD Coin (USDC) wins out by offering wire transfers to user’s bank accounts. This means they are fully and verifiably backed and traders can feel safe holding them.

Are TUSD Stablecoins The Same As Dollars?

TUSD stablecoins are not actual dollars, but they can be redeemed for the equivalent value. TUSD, like most crypto coins, exists as an ERC-20 token (and TRC-20 token on other networks), and can be transferred from one crypto wallet to another. There are multiple variations of TUSD for different blockchains.

TUSD uses smart contracts on its respective networks to retain its peg to the dollar. Volatile cryptocurrencies such as Ethereum can go up and down in value, while the TrueUSD price is $1. If a user holds $100 of Ethereum today, it could be $110 or $90 tomorrow due to volatility. The same user holding $100 of TUSD would hold $100 indefinitely.

There is controversy surrounding the backing of crypto stablecoins because they are programmable digital currency. This means that with the click of a button, a programmer could mint new digital dollars that may be un-backed by real dollars.

To provide collateral, stablecoins can have multiple forms of backing:

  • Fiat backing: The stablecoin is backed by the equivalent value in dollars. The company has to hold dollars in their bank reserve for every digital dollar they mint.
  • Crypto backing: The stablecoin is backed by the value of other crypto such as Bitcoin. The company often holds crypto reserves of equivalent value.
  • Commodity backing: The stablecoin is backed by a certain commodity such as oil, gold, etc.
  • Arithmetic backing: The stablecoin is backed by another token that is related to that token. Arithmetic stablecoins often lose their peg and have to be restored using other assets.

TUSD is a fiat-backed stablecoin. This is arguably the best variation of a stablecoin because the company that issues it can provide proof of funds to any financial regulatory body such as FinCEN. This makes it safer to store value for traders who trade hundreds of thousands or millions of dollars worth of crypto.

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As a crypto stablecoin, TUSD can suffer from the downsides of the respective network it runs on. For instance, if a trader is using the ERC-20 version of TUSD on Ethereum, they could spend $50-100 on gas fees transferring between wallets. One way to get around that is to use Phemex and transfer the coin directly to the TrustToken app when you cash out.

Trade TUSD on Phemex:

Who Is Behind TUSD?

TrueUSD is a product of TrueCoin LLC which is a US-based company. It is run by Silicon Valley entrepreneur and crypto veteran Rafael Cosman. Cosman used to work for Google in the Artificial Intelligence department and he worked for Peter Thiel’s “Palantir Technologies” before he went on to create TrueCoin LLC.

The team’s intentions were to create a mix between utility and value in the crypto industry. The first test version of the product was released in late 2017 and the TUSD stablecoin went live in March 2018. It has grown considerably over the last 4 years to more than $1 billion market cap.

Is TUSD Compliant With Governments?

TUSD is different from other crypto stablecoins because it’s fully backed by cash reserves and is a US-based registered LLC that goes by the name of “TrueCoin LLC.” The company is compliant with government bodies such as the US Financial Crimes Enforcement Network (FinCEN) and with the Bank Secrecy Act.

Users who deposit TUSD on the platform to cash out to their bank accounts will have to submit personal details under KYC laws in order to determine whether or not they’re on an international sanctions list, to comply with laws that TrueCoin LLC adheres to.

TrueCoin LLC collaborates with Cohen & CO which is a major US-based accounting firm that verifies all mints on TUSD and other stablecoins are 100% backed by USD reserves in their bank accounts. Other stablecoins issued by the company such as TGBP, TCAD, and TAUD also have equal financial backing and adhere to the same financial regulatory standards.

If TUSD is government-compliant and every dollar minted is backed, this begs the question: How does TrueUSD make money? The answer is that they charge a certain percentage fee by investors who request them to mint new tokens. For example, if Phemex wants a fresh mint to replenish our reserves of TUSD we would pay a fee to the company for the minting.

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How to Cash Out With TUSD Crypto?

The TrustToken app is a TrueUSD wallet that allows users to deposit and withdraw TUSD and other assets by the company. If a user wants to cash out their TUSD, they can have it wire transferred to their bank account by registering a free account.

Wire transfers are available on TrustToken’s app

Wire transfers are available on TrustToken’s app.

There are two options to cash out: “Individual” and “Business.” If a user links an individual account, it has to be tied to their real name and match the data they provide to the company. If they register a business account, they can transfer larger amounts to a bank account registered to a business.

The funds will be transferred after an audit which can take a few hours and there are transfer fees. Domestic US transfers cost $30 and international transfers cost $100. Users also have to pass KYC requirements before they are allowed to withdraw fiat dollars to their bank account.

Conclusion

TrueUSD (TUSD) stands out by complying with financial regulations in the US and offering immediate bank transfers directly from their LLC to user’s personal bank accounts. Most stablecoin companies only deal with businesses such as crypto exchanges while TrueUSD adds a personal touch and redeems customer’s funds personally.

The TUSD currency is fully backed by USD reserves and is frequently audited by top accounting firms in the US. The appeal of this currency is that risk is significantly reduced for investors and they can feel safe holding large amounts of money for extended periods.


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