An invention from the Great Depression and the Technology of the 21st Behind it is a startup known as Stronghold that will launch the USD Anchor, which operates in the footsteps of the stellar blockchain while using its consensus mechanism to review transactions. The new token will be secured one-to-one with the US dollar held with Prime Trust, a Nevada recognized trust company. The companies will then go ahead and only deposit the cash with banks that are insured by the federal deposit insurance.
Originally, New York-based Signature Bank was expected to be the insured hedge for the new stable coin, but given recent developments, they appear to have pulled out of business at the last minute. At least according to IBM. After the turnaround of Signature Bank, IBM will now partner with Stronghold to secure use cases for the token. IBM will play a big part in this and try to convert their customers. IBM’s Jesse Lund stated that it was imperative for them to track the strengthening of all digitized transaction networks and repay the transactions with digital fiat currency on the same blockchain.
Stronghold’s role in all of this will be to act as an anchor or ramp to the star network. Stronghold will provide the electronic infrastructure necessary to back up the US dollars on deposit with Prime Trust and insured by the FDIC. An FDIC backup is a very strong endorsement and mark of credibility as the US agency has won the trust of Americans by keeping their money safe for decades. Stronghold’s co-founder and CTO, Sean Bennett, advocated partnering with IBM by expressing the need for a change in the way we manage and trade assets. The CTO went on to explain that asset-backed tokens have the ability to seamlessly access all funds, thereby improving the flow of money around the world.
According to Jesse Lund from IBM, institutional customers now have access to the stable coin, whereby the financial institution aims to use it sensibly within the shortest possible time. Despite the project’s positive outlook, a dark cloud was drawn when comparing it to the controversial Tether project, raising questions due to doubts about Tether’s dollar reserves. However, Lund set this project apart from Tethers by referring to their FDIC coverage and the presence of a nationally recognized company in the deal, which Tether did not. Prime Trust CEO Scott Purcell underscored Lund’s argument by noting that, unlike Tether, his firm has been fully audited, a statement that is likely to reassure many investors.
IBM envisions a strong network of diverse asset classes, and stable coins are just one step towards the emergence of multiple asset-based digital currencies. The stable coin project also represents a growing bond between IBM and Stellar. Through this partnership, IBM benefits from Stellar’s wealth of experience in international payments.
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