London Block Exchange Announces GBP-Backed Stablecoinbr>
London Block Exchange (LBX), a multi-cryptocurrency exchange based in the UK, is partnering with an unnamed bank to create a new cryptocurrency pegged to the British pound.
Dubbed LBXPeg, LBX said in its announcement that the new cryptocurrency will be created on the ethereum blockchain and will be tied to the value of GBP held in an auditable UK bank account on a 1:1 basis. LBX noted that the stablecoin will allow users to transfer the digital equivalent of GBP “quickly, easily and on a global scale.”
“LBXPeg is required in the market as although the appetite for stablecoins is growing, trust in current projects remains flat,” the exchange said. “Through opaque management structures, distribution schedules and auditing processes, many available stablecoin offerings are inadequate for the needs of businesses, traders and consumers. They need a product that they can trust to be managed in a correct and compliant manner.”
While the pound-pegged stablecoin will initially utilize the ethereum blockchain, it will also be issued on other blockchains where compliance controls can be maintained. After the initial release, the company will explore tying the stablecoin’s value to accounts which hold other fiat currencies, such as EUR and USD, to improve both its scope and stability.
BX CEO Benjamin Dives said that they would be ready for the first crypto-pound to be minted in the next 10 days, adding that the reserves underpinning the coin would be audited by a leading accountancy firm on a regular basis.
“The primary use case will be 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,” Dives said.
In a recent study by crypto wallet provider Blockchain, institutions and individuals cited significant volatility of purely digital cryptocurrencies as one of the main reasons why they have remained on the crypto sidelines to date and stablecoins have been developed to address this issue.
According to the study, there are a total of 57 stablecoins in various states of development, either fully deployed or awaiting launch in the coming months.
“The total number of active projects makes stablecoins one of the largest cryptoasset categories, and as we show in the report stablecoins are also a leading category across a number of other key metrics (e.g., venture funding). The level of interest and resources devoted to stablecoins is striking and indicates that stablecoins are viewed as a very important part of the digital assets ecosystem. Indeed, stablecoins are often thought of as a foundational or infrastructure layer, one that could significantly expand the cryptoasset userbase from our current estimate of approximately 20-30 million individuals.”