Mehen Finance planned to launch USDM in early 2023 but saw delays after crypto-friendly banks shuttered in 2023 and its banking partner went to work with Circle.
Layer-1 blockchain Cardano has welcomed its first 1:1 fully fiat-backed stablecoin, USDM, the latest entrant in a $146-billion stablecoin market dominated by Tether
USDT
tickers down
$1.00
and Circle
USDC
$1.00
.
Launched on March 17, the Mehen Finance-founded stablecoin allows holders to mint or redeem USDM
via the United States dollar and differs from existing Cardano-based stablecoins such as DJED and iUSD, which are algorithmic and synthetic-based
Mehen founding partner Matthew Plomin said the road to launching the stablecoin on Cardano wasn’t an easy one, with delays caused by issues with U.S. banks in 2023.
The firm released its white paper in November 2022, explaining a U.S. dollar-backed stablecoin would provide a “much-needed service” to Cardano users.
Mehen planned on launching USDM in 2023, but “everything changed” when Silicon Valley Bank, Silvergate and Signature Bank shuttered in March 2023, Plomin said in a March 14 X Spaces.
Plomin revealed the bank it was working with, Cross River, cut ties with Mehen around when the bank teamed up with Circle, the second-largest stablecoin firm, which was looking for a new banking partner at the time.
“Once they had them, they didn’t care about us anymore,” Plomin said, adding:
“[It was a] kick in the nuts delay.”
Mehen now uses fintech firm Plaid’s services to mint and burn U.S. dollars for USDM.
Plaid provides a payment transfer network between Bank of America, Chase, Wells Fargo and other large U.S. banks to power fintech and cryptocurrency products.
The firm integrated Plaid’s services in August 2023, according to an X post from Steven Fisher, chief technology officer of Mehen.
“Adding your bank will allow you to deposit USD to mint USDM and allow you to burn USDM to receive USD,” Fisher said.
Mehen is now also actively seeking a money transmitter and virtual asset service provider license to expand its services in the United Kingdom and Europe.
Meanwhile, Plomin said about two dozen firms plan to integrate USDM on their platforms, which range from lending and borrowing protocols to decentralized exchanges. Mehen noted it will take one to two days for institutions to complete the onboarding process.
“This means USDM will slowly be arriving on-chain the week of the 18th,” it said.
Issuance and management of USDM will be governed by smart contracts and decentralized oracles to ensure transparency and security, Mehen states on its website.