Mad Crypto: The stars show Libra is bad news for Gemini dollar

This post first appeared in Frank Chaparro’s weekly column “Mad Crypto,” which is sent to Genesis subscribers’ inbox every Monday morning. 

The Winklevoss twins appeared on CBS Sunday Morning this weekend, days before their arch-rival, Mark Zuckerberg, gears up to announce Facebook's new cryptocurrency. And with poetic timing, Tyler and Cameron told CBS they aren't worried about the Libra coin launch. "There's so much pie to grow. At this point we need to be frenemies," one of the twins (pretty sure Tyler) said. 

Still, there is one major piece of the twins' crypto empire that the Facebook coin will almost certainly eat into: the Gemini dollar (GUSD). Even if the twins won't admit it, there's no doubt that Facebook has been able to secure wide-ranging retail partnerships for its Libra stablecoin that Gemini could only dream of. 

Stablecoins such as Tether and TrueUSD entered the market with a target clientele of traders looking for an easy way to trade out of volatile cryptocurrency positions into a stable crypto safe-haven, but the vision for GUSD was to be a form of digital cash, usable at major retailers. Gemini, however, has failed to ink any major deals with merchants beyond Flexa, whereas Facebook strikingly has already lined up dozens of partners pre-launch. As The Block first reported, Facebook has signed up retailers like Uber and Lyft as well as cryptocurrency firms like Coinbase and Xapo. 

Indeed, the decline of Gemini dollars has been well-documented. Its market cap has fallen from $103 million to just around $20 million. Elsewhere, rivals Paxos Standard, USDC, and TrueUSD have all seen their market caps rise. 

Still, the Winklevii, whose bitcoin rise and Facebook-fallout is documented in Ben Mezrich's "Bitcoin Billionaires," might find solace in the fact that Facebook's crypto launch could be bad news for the other US-regulated stablecoins on the market too. For instance, Circle has only just opened the CENTRE consortium behind its stablecoin USDC to public institutions. Meanwhile, Facebook already has a consortium of nearly 30 announced members lined up. And on top of that, Circle's main USDC partner, Coinbase, is spreading its bet as a member of Facebook's Libra Association too. Talk about ouch. 

The only thing Facebook is missing is exchange listings but that will come as soon as its mainnet is launched. Indeed, it's already had discussions with Binance and Coinbase about listing its coin, which will be tied to currencies and bonds.

Still, stablecoin king Tether might be safe from Zuckerberg's omnipresent grip. Tether's low friction, lenient-approach-to-KYC will likely not be disrupted by Libra, which I assume will have pretty strong KYC (the last thing Facebook wants is more brouhahas with regulators).

Still, as regulated stablecoins go, they appear to have cracked the egg.