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Amidst regulatory uncertainty, U.K.-based Saga hopes to introduce a global digital currency that lawmakers and consumers alike find agreeable. The “stablecoin” (think Tether) is pegged to a basket of fiat currencies and is not anonymous, making it unlikely to win over Bitcoin enthusiasts who value the coin’s decentralized mode of operation.
Related Reading: Why There Remains a Case For a $4,200 Bitcoin (BTC) in 2020
Similarities with Bitcoin and Libra
Tuesday, November 10, the company launched its Saga (SGA) token, a digital currency tied to a basket of fiat currencies — a move made in attempts to make it less volatile. While SGA shares some similarities to stablecoins like Facebook’s Libra and true digital currencies like Bitcoin, there are some glaring differences.
Rather than creating a new asset basket-like Libra’s, Saga is pegging its token’s value to bank deposits in the same group of currencies that form the International Monetary Fund’s special drawing rights (SDR). These are international reserve assets — primarily dollars, as well as the euro, Chinese yuan, Japanese yen, and British pound — held by central banks to supplement their official reserves.
Another distinction from Libra is the fact that Saga apparently won’t be profiting from the coin and it’s only acting as an issuer of the token. SGA will initially be available to purchase on Saga’s website and is being listed on the cryptocurrency exchange Liquid.
“Unlike other players, we don’t want to be the issuer and the payments layer and the custodian,” Saga founder Ido Sadeh Man told major media outlet CNBC in an interview. “We’re focusing on the monetary part of it, on the issuance of a sound currency for global use, and we will increasingly liaise with partnerships in the realms of custodianship and of payments.”
Not a Direct Threat
Saga says its offering is different as it encompasses “banking-grade compliance” with anti-money laundering checks that ensure the people transacting in the token aren’t anonymous.
With Bitcoin on the other hand, users are identifiable only by an alphanumeric address. This layer of protection is what many find so attractive about truly-decentralized coins.
Saga also claims its model provides a “democratic” alternative to Libra, which is being overseen by a consortium of 21 companies. In Saga’s case, “the holders are the sovereign of the currency,” according to Sadeh Man.
While this idea that SGA holders are the sovereigns of the currency sounds attractive, the claim that such holders will be able to vote on Saga’s board of directors and steer its monetary policy seems an almost impossible logistical feat.
And off the bat there’s already another big problem with Saga’s tokens: they aren’t regulated, and therefore won’t launch in the U.S. until it is clear the company is respecting compliance in the country.
Despite uncertainty about its future in the U.S., the coin will be available in other locales, though whether it will be a success remains to be seen. Will the coin scare off crypto traditionalists with its centralized issuance and lack of anonymity? Or will SGA’s promise of stability provide some assurance to those afraid of volatility currently associated with other digital currencies like Bitcoin?
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