Saga Develops Regulatory Acceptable Cryptocurrency
Through an advisory board that includes leading economists such as Nobel laureate Myron Scholes, the US-based Saga hopes to introduce a global currency that regulators find acceptable.
On Tuesday, the company launched its saga token (SGA), a virtual currency tied to a basket of currencies to maintain stable values. This is not very similar to Libra, Facebook’s cryptocurrency, which has been greeted with many regulatory objections and restrictions since its development announcement. But one key thing that sets it apart from this project is what the value of the Saga currency is based on..
Rather than creating its own basket of assets like Libra’s, Saga pegs the value of its token to bank deposits in the same group of currencies that form the International Monetary Fund‘s Special Drawing Rights (SDR) – international reserve assets held by central banks in addition to their official reserves. The basket is formed in dollars, as well as in euros, Chinese yuan, Japanese yen and British pounds.
Another difference from Libra is that the Saga does not benefit. It only acts as the issuer of the token, and does not create its own digital wallet for users to store and exchange funds, as Facebook does with Calibra. SGA tokens will initially be available for purchase on the Saga website and are listed on the Liquid cryptocurrency exchange.
«Unlike other players, we do not want to be an issuer, payment system and custodian, Saga founder Ido Sadeh Man told CNBC in an interview. – We focus on the money side, on the release of a reliable currency for global use, and we will increasingly keep in touch with partners in the field of holding funds and making payments».
Like Libra, SGA has the characteristics of a so-called stablecoin that seeks to avoid the volatility of cryptocurrencies such as bitcoins. Saga says it can stabilize the value of the SGA with smart contracts – self-executing contracts on the blockchain that are used to adjust money supply and meet demand.
Regarding how it will be used, Sadeh Man said that the purpose of the SGA is to serve «additional currency for cross-border payments». He gave an example of how British consumers want to use it to pay for goods on Amazon if the pound fluctuates amid Brexit news.. «This is where we see Saga suitable as a world currency», – he noted.
In addition to the Nobel laureate Scholes, Saga also sees Jacob Frenkel, former president of international business at J.P. Morgan, and Dan Galai, pioneer of the VIX Volatility Index. «I and the core tech team, being technology experts, realized quite early on that we couldn’t do this alone, ”Sadeh Man said. – We still need policy experts».
But a high degree of skepticism is warranted for nascent blockchain projects like Saga. In 2017, investors acquired new cryptocurrencies generated through so-called initial coin offerings, a fundraising practice that led to numerous scams. This, in turn, means regulators are now more cautious than ever when it comes to the crypto space given its link to illegal activities..
Saga says her proposal is different from others as it includes «bank level compliance» with money laundering checks that ensure that the people transacting with the token are not anonymous. This differs from Bitcoin, where users can only be identified by an alphanumeric address. And the main source of concern for regulators about Libra was its potential use in illegal transactions..
He also claims that his model provides «democratic» an alternative to Libra, overseen by a consortium of 21 companies. In the case of Saga, «holders are sovereign currencies», according to Sadeh Manu, such holders will be able to vote on Saga’s board of directors and manage its monetary policy. He said he agreed with Apple CEO Tim Cook that corporations like Facebook should not control the currency..
Although it is a non-profit organization, the venture is supported by investors including Lightspeed Venture Partners and Mangrove Capital Partners. But the company claims that these investors did not receive shares in return for their investments – they received Saga tokens instead. «genesis», or SGM, which can be converted to SGA after starting the last.
New EU Crypto Regulation Proposal Explained
However, there is one glaring problem with Saga tokens – they are not regulated and therefore will not be launched in the US. America «is an area we don’t want to be in» currently, Sadeh Man said, adding that «we only want to work where it is clear that we meet the requirements». However, he hopes that the picture of US regulation will become clearer in the future..