As the cryptocurrency industry tries to regain its footing after the collapse of FTX in late 2022, digital asset trading remains scattered across a global fleet of exchanges, from publicly traded companies such as Coinbase to decentralized applications such as Uniswap. are.
On Wednesday, a new exchange joined the ranks as TrueX emerged from stealth after more than a year in development. Founded by Vishal Gupta, previously head of exchanges at Coinbase and head of USDC at Circle, and Patrick McCreary, a Coinbase engineer, TrueX is different by building trading and payments around stablecoins. approach is adopted.
“We just rethought the whole thing,” Mr. Gupta said in an interview with Fortune magazine.
build from scratch
A fundamental challenge for cryptocurrency exchanges is to build a bridge between the fiat and digital asset worlds. Stablecoins first became popular with dollar-backed solutions such as Tether and USDC, a collaboration between Circle and Coinbase, and are a popular choice for traders to preserve the value of volatile assets than cryptocurrencies such as Bitcoin and Ethereum. Crypto-native solutions are now available.
Under Mr. Gupta’s leadership, Coinbase became the first exchange to fully integrate around stablecoins by merging USDC and USD. This means that the two are essentially treated as equivalent within the exchange, simplifying the order book for traders as they move back and forth between crypto and fiat currencies. Before FTX collapsed, it went a step further by using various stablecoins to settle transactions.
At the moment, TrueX works similarly to Coinbase and uses PayPal’s PYUSD as its default payment currency. In other words, it plays the equivalent role of a dollar within the TrueX ecosystem. However, according to Mr. TrueX aims to be able to manage transactions while minimizing stablecoins. backend.
Although the founders didn’t say so directly, a possible reason for choosing PYUSD as TrueX’s default stablecoin is that it supports USDC, which Mr. Gupta described as “the best thing I’ve ever done.” This is probably because they choose a different lane than Coinbase. Although PYUSD has not achieved the stratospheric growth of USDC or Tether, its close relationship with PayPal and issuer Paxos presents a promising opportunity.
“We live in a world where it’s not a one-man game,” Mr. Gupta said. “If you look at traditional finance, you have Goldman Sachs, you have Morgan Stanley.”
Even though TrueX’s goal is to exist parallel to Coinbase, it offers different functionality. Unlike Coinbase, which acts as both a broker and custodian for transactions (much to the chagrin of the Securities and Exchange Commission), TrueX is working with Paxos as an eligible custodian. And soon, TrueX will offer broad support for different types of stablecoins as payment and collateral, with Coinbase being built around USDC.
At least initially, TrueX’s functionality will be more limited. It will start with spot trading in a small number of “head and torso” assets, as Mr. Gupta puts it, and will be available only to institutional investors, but it will operate in the United States. Given the background in which Mr. Gupta launched Coinbase’s derivatives business, other products and assets may be on the horizon.
Under its parent company True Markets, TrueX has raised $9 million in seed funding from top crypto-focused investors including RRE Ventures, Reciprocal Ventures, and Hack VC, as well as crypto-native companies such as Paxos, Solana Foundation, and Aptos. obtained and launched. At launch, TrueX will encourage market makers and takers to participate through a liquidity program.
