As the crypto industry seeks to regain its footing after the collapse of FTX in late 2022, digital asset trading remains dispersed among a global cohort of exchanges, from public companies such as Coinbase to decentralized applications like Uniswap.
On Wednesday, a new exchange entered the mix as TrueX emerged from stealth after more than a year of development. Founded by Vishal Gupta, who previously served as head of exchange at Coinbase and head of USDC at Circle, along with former Coinbase engineer Patrick McCreary, TrueX is taking a different approach by building its trading and settlement around stablecoins.
"We just rethought the entire thing," said Gupta in an interview with Fortune.
Building from the ground up
The fundamental challenge for crypto exchanges is building bridges between the worlds of fiat currencies and digital assets. Stablecoins first emerged in popularity with dollar-backed solutions such as Tether and USDC, a collaboration between Circle and Coinbase, so that traders could have a crypto-native solution for holding value in a less volatile asset than cryptocurrencies such as Bitcoin or Ethereum.
Under the guidance of Gupta, Coinbase became the first exchange to fully integrate around a stablecoin by unifying USDC and USD, meaning they were essentially treated as equivalents within the exchange, simplifying the order books as traders moved in between crypto and fiat. Before its collapse, FTX went even a step further by using a variety of stablecoins for the settlement of trades.
For now, TrueX will operate similarly to Coinbase, using PayPal's PYUSD as the default settlement currency, meaning it will serve as the equivalent of dollars within the TrueX ecosystem. But soon after TrueX launches its trading functionality in the next two to four weeks, according to Gupta, TrueX aims to become stablecoin agnostic like FTX, allowing traders to move between different stablecoins such as USDC, with TrueX managing the trades with minimal slippage on the backend.
While the founders didn't say so directly, a likely reason they chose PYUSD as TrueX's default stablecoin is to choose a different lane from Coinbase, which favors USDC, and which Gupta described as the "best job I've ever had." While PYUSD has not achieved the stratospheric growth of USDC or Tether, its close ties to PayPal—along with issuer Paxos—offer promising opportunities.
"We live in a world where these are not single-winner games," said Gupta. "You look at traditional finance, and if there's a Goldman Sachs, there's a Morgan Stanley."
Even if the goal for TrueX is to exist alongside Coinbase, it does offer different features. Unlike Coinbase, which serves as both broker and custodian for trading (much to the chagrin of the Securities and Exchange Commission), TrueX is working with Paxos as its qualified custodian. And soon, TrueX will offer broader support for different types of stablecoins as settlement and collateral, where Coinbase is built around USDC.
At least in its initial stages, TrueX will have more limited functionality. It will start with just spot trading of a handful of "head and torso" assets, as Gupta put it, and will only be open to institutional traders, though it will be active in the U.S. Given Gupta's background in launching Coinbase's derivatives business, other products—and assets—are likely to come soon.
TrueX is launching under the parent company True Markets with $9 million in seed funding from top crypto-focused investors, including RRE Ventures, Reciprocal Ventures, and Hack VC, along with crypto-native companies including Paxos, Solana Foundation, and Aptos. At launch, TrueX will incentivize market makers and takers to participate through a liquidity program.
