An invention from the great depression and 21st century technology has combined to make a stab at creating a crypto currency that will be pegged on the US dollar or “Stable Coin”. A startup known as stronghold is behind this and will launch the USD Anchor which will operate on the tracks of the stellar block chain while utilizing its consensus mechanism to verify transactions. The new token will be backed up one for one with the US dollar held at Prime Trust which is a Nevada charted trust company. The companies will then go ahead and deposit the cash only at banks that are insured by the federal deposit insurance corp.
Initially, it was expected that Signature bank based in New York would be the bank to provide insured backing of the new stable coin, but considering recent developments, they appear to have backed out of the deal at the last minute At least according to IBM. Upon Signature Bank’s about turn, IBM will now pursue a partnership with Stronghold in a move that will help secure use cases for the token. IBM will have a huge part to play in this which will involve trying to convert their clients. IBM’S Jesse Lund stated that it was imperative for them to pursue the empowerment of all digitized transaction networks and repay the transactions with digital fiat currency on the same block chain.
The role of Stronghold in all this will be to act as an anchor or a ramp to the stellar network. Stronghold will provide the electronic infrastructure needed to ensure a surety on the US dollars deposited to Prime Trust and insured by the FDIC. An FDIC backup is a very strong endorsement and a sign of credibility since the US agency has earned the trust of Americans by keeping their money safe for decades. Stronghold’s cofounder and CTO, Sean Bennett endorsed the partnership with IBM by expressing the need for change in the way we manage and trade assets. The CTO further stated that asset backed tokens had the ability to provide access to all monies seamlessly thereby improving the flow of money worldwide.
Institutional customers now have access to the stable coin according to IBM’s Jesse Lund with the financial institution aiming to put it to good use within the shortest time possible. Despite the positive outlook of the project, a dark cloud was cast when it was compared to the controversial Tether project which raised questions due to doubt on Tether’s dollar reserves. Lund however differentiated this project from Tether’s by pointing to their FDIC coverage and the presence of a state charted company in the deal which wasn’t the case with Tether. Prime Trust CEO, Scott Purcell, added weight to Lund’s argument by stating that his firm was fully audited unlike Tether, a statement likely to reassure a lot of investors.
IBM envisions a strong network with different asset classes and stable coin is just a step towards the emergence of multiple asset backed digital currencies. The Stable Coin project also represents a growing bond between IBM and Stellar. This partnership will see IBM benefit from Stellar’s wealth of experience when it comes to international payments.
