Stronghold, a cryptocurrency startup, made an announcement on Tuesday introducing USD Anchor, a stablecoin which will run on Stellar’s blockchain platform and apply its consensus mechanism to validate transactions. USD Anchor will be backed one-for-one with U.S. dollars and held by Nevada-based Prime Trust.
Incidentally, the Prime Trust will be responsible for depositing the cash at banks that are insured by the Federal Deposit Insurance Corp. (FDIC). IBM will be partnering with Stronghold to launch the USD Anchor token and is planning to explore various applications for the same among its financial institution clients, claim sources. Initially, Signature Bank based out of New York City was supposed to provide the federal insurance backing for the token but seems to have pulled out of the partnership at the last minute.
From a technical point of view, reports infer that Stronghold will issue the digital currency or token, which will represent a claim on U.S. dollars held as deposits by the Prime Trust and insured by the FDIC.
The head of blockchain services for financial institutions at IBM, Jesse Lund said the purpose behind this venture is to enable all types of digital transactional networks to complete their transactions involving digital fiat currency on a single blockchain system. IBM has made the stablecoin available to institutional clients and is attempting to initiate its use as soon as possible, with some IBM supported solutions expected to make use of the token before the year ends, Lund added.
Reportedly, IBM will first target cross-border payment applications that would be in the form of remittances and small forex transactions, where Stronghold’s Anchor will enable the proceedings to be as fast and smooth as cryptocurrency, sans the volatility.
Sean Bennett, co-founder and CTO of Stronghold, stated the necessity for evolving the procedures that entail seamless trade and management of assets in any form. Adding to it, he said that asset-backed tokens can allow for uninterrupted access to all currencies and improve the movement of money worldwide.
Pankaj Singh Develops content for Algosonline, Market Size Forecasters, and a couple of other platforms. A Post Graduate in Management by qualification, he worked as an underwriter in the UK insurance domain before deciding to switch his field of profession. With experience in technical and niche writing, he was encouraged to opt for a career in content writing and now pens down articles pertaining to market research, industry news and business trends.