Nov 4 (Reuters) - A consortium of financial technology

and cryptocurrency companies including Robinhood,

Kraken and Galaxy Digital ( BRPHF ) on Monday introduced a joint

stablecoin pegged to the U.S. dollar.

The aim of the newly formed Global Dollar Network is to

accelerate usage of stablecoins worldwide and promote an asset

that provides proportionate economic benefits to its partners,

the companies said.

WHY IT'S IMPORTANT

Stablecoins are digital tokens designed to keep a constant

value. They are backed by traditional currencies such as the

U.S. dollar or euro.

As cryptocurrencies like bitcoin have rocketed in value this

year thanks to forecasts for lower U.S. interest rates and the

introduction of new crypto exchange-traded products, more

companies have devoted resources to promoting stablecoins.

Stablecoins are often used for converting crypto tokens into

traditional currencies because they are shielded from the wild

price fluctuations seen in other cryptocurrencies.

CONTEXT

The Global Dollar Network is based around a new stablecoin

called USDG, which will be issued out of Singapore by crypto

platform Paxos. The token will be governed by a committee made

of representatives from the network's partners, which also

include Anchorage Digital, Bullish and Nuvei ( NVEI ).

USDG will face the uphill task of elbowing into a

concentrated market where the two biggest players - Tether and

USD Coin - account for nearly 90% of the total market

capitalization, according to data from CoinGecko.

The move from the firms involved comes as crypto players

largely anticipate U.S. officials warming to digital assets,

regardless of who wins the presidential election on Tuesday.

KEY QUOTE

"Global Dollar Network will return virtually all rewards to

participants and is open for anyone to join. It is designed to

incentivize global stablecoin usage and accelerate societal wide

adoption of this technology," Paxos CEO Charles Cascarilla said.