Jewel Bank, Polygon to launch Bermuda’s first USD-backed stablecoin

Institutions in Bermuda will soon be able to trade real-time settlements using a stablecoin with a 1:1 peg to the United States dollar, Jewel Bank founder and chairman Chance Barnett told Cointelegraph. 

Called Jewel USD (JUSD), the first stablecoin to be released in the territory is powered by the Polygon blockchain, enabling transactions between wallets available to institutional clients. In the future, the bank plans to use the Polygon ecosystem for commercial and retail stablecoin-based payment solutions, including transactions between institutions and businesses and payments between individuals.

“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.”

Twenty-five stablecoins are currently traded on the Polygon blockchain, including a synthetic euro token, a Yen-pegged Japanese stablecoin and a South African stablecoin pegged 1:1 with the South African rand.

Related: 13% of Americans have now held crypto: JPMorgan research

Although an official launch date has not been set, the bank said it should happen within the next few months. According to Jewel, the stablecoin‘s operations and its reserves will be subject to bank-level audits and regulatory oversight, with updates 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 working to keep its relevance as a financial jurisdiction by supporting digital assets business. In 2020, the territory announced a partnership with stablecoin platform Stablehouse to roll out a pilot program for a digital “stimulus” token, targeting both residents and merchants within the islands.

“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. 

The Bermuda Monetary Authority has granted 14 licenses for crypto firms to operate on the British island territory as of June 2022, with four of those issued in 2022, Cointelegraph reported.