As governments struggle to rein in cryptocurrencies like Bitcoin and Ethereum, a Swiss-Danish group is launching a new blockchain technology it says will be ready for regulation from day one.
Backed by one of the founders of Saxo Bank A/S and a director at Volvo Cars, which both count Zhejiang Geely Holding Group Co. as an owner, the project will on Wednesday introduce its blockchain, which has been developed with Denmark’s Aarhus University. The project’s cryptocurrency – Global Transaction Unit (GTU) – will be listed on exchanges over the summer.
The foundation behind GTU goes by the name of Concordium AG. Its chief executive, Lone Fonss Schroder, who’s also a vice chair at Volvo Cars, says the key difference between GTU and cryptocurrencies like Bitcoin will be its ability to provide the kind of transparency that regulators and members of the mainstream economy want.
“We have identification at the protocol level, and that means that every transaction comes with provenance,” Fonss Schroder said in an interview. “If the regulator wants to see, by court order, who’s done what, they can see it. That is why we say we have regulatory readiness.”
Meanwhile, Bitcoin slumped on Tuesday, with some analysts pointing to the recovery of Colonial Pipeline Co.’s ransom as evidence that crypto isn’t beyond government control. The FBI was able to find the Bitcoin by uncovering the digital addresses used by hackers, suggesting the biggest cryptocurrency may not offer the untraceability for which it’s often sought out.
What Bloomberg Economics Says…
“It may well be that corners of the crypto world are working toward a product they hope will be regulated and widely used. The ultimate establishment’ digital currency will of course only come once central banks launch their CBDCs.”
–Johanna Jeansson, Nordic economist
Regulating Bitcoin and its rivals has emerged as a key challenge as cryptocurrencies draw in ever larger crowds of enthusiasts, despite – or perhaps because of – their extreme volatility. But it’s far from clear how to regulate a product that’s generally designed to evade the scrutiny of national authorities. Governments from China to the U.S. are trying, but there’s so far no viable model that provides real regulation and transparency.
Fonss Schroder says the hope is that GTU will be more appealing to corporations who have considered the payment form, but are put off by the secrecy that normally accompanies crypto transactions. She says the goal is to promote GTU as a cryptocurrency for the establishment.
Geely’s billionaire founder, Li Shufu, “would like to see that in the future you can buy a car with the GTU, because it’s sustainable,” Fonss Schroder said.
Concordium earlier this year raised over $40 million from private and strategic sales, reaching a $4.45 billion valuation, according to a statement. Its chairman is the Saxo Bank co-founder Lars Seier Christensen.
GTU won’t impose the same kind of burden on the environment that Bitcoin mining does, because additional coins won’t be generated by channeling vast amounts of computer energy into cracking a code, the founders say. “We have 0.001% of Bitcoin’s energy spent,” according to Fonss Schroder.
Bitcoin’s carbon footprint has prompted former loyalists to turn their backs on the world’s most popular cryptocurrency. Tesla founder Elon Musk rocked the crypto market earlier this year when he aired his sudden concern over how energy intensive Bitcoin mining is, while still declaring his belief that cryptocurrencies have a future.
The creators of GTU say new coins will be produced using a so-called proof-of-stake technology, rather than the energy intensive proof-of-work that Bitcoin uses. Concordium says that model may also be more appealing to businesses.