Venture-Backed USD Token Announced By Strongholdbr>
San Francisco-based startup Stronghold has announced a new venture-backed USD token that was built directly on the Stellar blockchain.
Founded in 2017, Stronghold is a financial institution building an asset-agnostic global payment and trade ecosystem. Built on the Stellar network, Stronghold’s cryptocurrency trading platform currently has over 20,000 traders, and supports bitcoin, ethereum and Lumens. It claims to be the first and only trading platform and crypto exchange built on the Stellar network that settles in USD.
The “Stronghold USD” token is asset-backed at one-to-one US dollars per coin with reserves held by Prime Trust, a Nevada-regulated chartered trust company. The stable coin is designed as a B2B solution for financial institutions, multinational corporations, and asset managers. The token can act as a new liquidity tool for real-time foreign exchange and international settlement, as well as enable banks to issue credit into transactional networks and trade ecosystems. Since federally-insured cash deposits back Stronghold USD, it is not subject to the price volatility of a pure cryptocurrency like bitcoin or ether.
“The process for seamlessly managing and trading assets of any form from digital to traditional currencies, needs to evolve as financial institutions are seeking ways to break into new asset classes like cryptocurrencies,” said Stronghold co-founder and CTO Sean Bennett. “Asset-backed tokens can provide seamless access to all currencies, improving the global movement of money.”
Stronghold is currently working with IBM to explore uses for Stronghold USD within blockchain business networks on the IBM Blockchain Platform. The aim is to experiment with ways for financial institutions and other organizations to achieve faster, safer and more efficient transaction processing and money transfer throughout the world’s economy. However, the tokens are currently not available for retail customers.
“The digitization of real-world assets using blockchain can dramatically transform many forms of financial transactions conducted around the world,” said Jesse Lund, global vice president of IBM Blockchain. “New types of fiat-backed instruments, like Stronghold’s USD token, have the potential to improve the backbone of international banking operations and payments, giving banks an easier way to integrate with public blockchain networks without significant changes to their core banking and compliance infrastructure.”
Currently, dollar-pegged stablecoin Tether (USDT) is the largest stablecoin in the crypto market, with a market cap of above $2 billion. Tether, however, has been surrounded with controversies questioning whether the tokens in circulation were fully backed by the US dollar or not.
Stronghold said there are some differences with Tether versus what they are doing, adding that the FDIC coverage will help instill confidence in investors about the tokens being fully asset-backed.