Stephen Moore was nominated by Donald Trump for the Fed but his bid for the role failed by a few votes.
Now Mr Moore has decided to manage a different sort of currency which is a digital stablecoin called Frax.
The new coin will be a stablecoin pegged to the US dollar to reduce its volatility.
“I’ve followed monetary policy for 30 years and always been troubled by the government monopoly on currency, which is unhealthy for markets,” said Moore. “It’s very healthy for private competitors to challenge central banks over the money supply.”
Moore is one of the co-founders of Frax along with Sam Kazemian, he is an entrepreneur who launched a Wikipedia competitor that relies on blockchain technology to record entries. The pair say Frax will launch soon in the coming months, and will rely on the established blockchain which creates a tamper-proof public record to record Frax transactions. It will therefore be more friendly to the authorities.
This innovative new coin differs from Tether and other stablecoins due to the fact it will rely on a fractional reserve. This means it won’t be backed by a one-to-one pool of reserve dollars.
The Frax coin will rely on algorithms to loan out its reserves and collect interest in order to ensure the value of Frax is pegged to a dollar.
This is a vastly unproven method and in fact, a project called Basis tried it before. Basis founder Andreessen Horowitz raised USD 100 million but the project collapsed, under regulatory scrutiny and its founders reimbursed most of the funding.Let’s see if Frax can flourish where Basis failed.