A Stablecoin Hybrid is a form of blockchain Facilitated Commercial paper. It is an unsecured, short-term debt instrument issued by a corporation for the financing of accounts payable on the blockchain. and inventories and meeting short-term liabilities. Typical Maturities for a Stablecoin Hybrid is 90 days. A Stablecoin Hybrid is usually issued at a discount from face value and reflects prevailing market interest rates.
A major benefit of Stablecoin Hybrid is that it does not need to be registered with the Securities and Exchange Commission (SEC) as long as it matures before nine months, or 270 days, making it a very cost-effective means of financing.
Stablecoin Hybrid is a type of Commercial paper that pays a fixed rate of interest. Commercial paper is typically issued by large banks or corporations. As such, the denominations of the commercial paper offerings are substantial, usually $100,000 or more. However, The Blockchain facilitates the issuance and management of Stablecoin Hybrid contracts that can be aggregated for individual purchasers.
An example of Stablecoin Hybrid is when a Hotel is looking to finance receivables from its room bookings. The Hotel needs $100,000. Investors are offered $103,000 in face value of Stablecoin Hybrid in exchange for $100,000 in cash, according to prevailing interest rates. In effect, there would be a $3,000 interest payment upon maturity of the Stablecoin Hybrid in exchange for the $100,000 in cash, equating to an interest rate of 1% per month. This interest rate can be adjusted for time, contingent on the number of days the Stablecoin Hybrid is outstanding.
The Stablecoin Hybrid provides a convenient financing method because it allows issuers to avoid the hurdles and expense of applying for and securing continuous invoice Financing, and the Securities and Exchange Commission (SEC) does not require securities that trade in the money market to be registered.
Commercial Paper has traditionally been issued and traded among institutions in denominations of $100,000, with notes exceeding this amount available in $1,000 increments. Financial conglomerates such as investment firms, banks, and mutual funds have historically been the chief buyers in this market, and a limited secondary market for this paper exists within the banking industry. Stablecoin Hybrids will have a dedicated secondary market
Wealthy individual investors have also historically been able to access commercial Paper offerings through a private placement. Stablecoin Hybrids are a new asset class that will be available to retail investors through selected Crypto Exchanges
Stablecoin Hybrid assets will pay a higher rate of interest than equivalent instruments, due to the efficiencies provided by the blockchain
They are backed solely by the financial strength of the issuing enterprise in the same manner as any other type of corporate bond or debenture. Stablecoin Hybrids will be rated on a regular basis using the same rating system as for corporate bonds, with AAA and Aaa being their highest respective ratings.