London Blockchain Exchange (LBX), a UK based blockchain start-up, has announced plans to launch a cryptocurrency pegged to the Pound.
LBXPeg, the First Pound Backed Coin
LBX, a London based blockchain start-up, which currently offers over the counter (OTC) trading services, has announced plans to launch a UK Pound Sterling supported, stable coin dubbed as LBXPeg. The firm announced earlier on Saturday that it had received permission from an unnamed banking partner to start a new cryptocurrency.
The token will be pegged to the Pound one-for-one, and the currency reserves will be held in an account in a third-party bank. LBX is also in the process of building a cryptocurrency exchange and a crypto-card. LBXPeg will leverage the Ethereum blockchain, and the token will be an ERC-621 token build on the ERC-20 standard.
The firm had started its OTC operations in November 2017. The company follows strict KYC/AML norms and claims to be the only London-based cryptocurrency exchange offering safeguarded UK Banking. According to Benjamin Dives, CEO at LBX, the reserves would be regularly audited by a top-rated accountancy firm and LBXPeg would be the world’s first stable coin backed by the Pound.
He said, “We would be ready for the first cryptopound to be minted in the next 10 days.” He also added, “The primary use case will be the settlement for OTC trades in the London market, then commonwealth exchanges where they don’t have Fiat banking, and then securities tokens who want to pay dividends in a cryptopound.”
What are Stable Coins?
Cryptocurrencies are a volatile asset class. Stable coins are crypto-assets backed by physical assets like the US Dollar or gold and popular for their price stability. These coins, which like other virtual currencies, are interoperable and digitally transferable in nature find use amongst the crypto-traders and investors.
Currently, the most popular and used stable coin is Tether, which is pegged to the US Dollar. In the recent past Circle, a blockchain company backed by banking giant Goldman Sachs, launched the US Dollar coin, a new stable coin pegged to the dollar. The Winklevoss twins, owners of Gemini, who are also known for their early involvement at Facebook, have announced Gemini Dollar, a cryptocurrency pegged to the Dollar on a one-to-one ratio.
The existence of stable coins helps cryptocurrency exchanges that due to compliance issues can’t accept Fiat currency, to provide Fiat like liquidity. Apparently, 60% of all Bitcoin trade globally happen using Tether. Stable coins will also find acceptability with merchants, who have been hesitant to accept cryptocurrencies due to their volatile nature, as a medium of exchange.
With the crypto-asset trade volumes growing across the globe, the need for transparent and trustworthy stable coins will also increase. Currently, the customers do not have many options and have no choice but to rely on Tether only, which had attracted suspicion earlier this year due to the opaqueness in operations.
Do you think more stable coins that establish trust will result in an increase in cryptocurrency trading? Let us know in the comments below.
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