On July 17, a startup Stronghold has announced it is launching a stable coin called Stronghold USD, which will run on the Stellar blockchain and use its consensus mechanism to verify transactions. The token will be backed one-for-one with USA dollars held at a Nevada-charted trust company called Prime Trust, which in turn will deposit the cash at banks insured by the Federal Deposit Insurance Corp (FDIC), the USA agency created in 1933.
According to IBM, New York City-based Signature Bank was originally expected to be providing the federally insured backing of the stable coin, but it appears to have backed out of the partnership.
IBM is partnering with Stronghold, and said it will explore various use cases for the token with its financial institution clients.
“The process for seamlessly managing and trading assets of any form from digital to traditional currencies, needs to evolve,” – said Stronghold’s co-founder and CTO, Sean Bennett, in a release. – “Asset-backed tokens can provide seamless access to all currencies, improving the global movement of money.”
The first use cases IBM will pursues will be around cross-border payments in the form of remittances and small-scale foreign exchange transactions.
Jesse Lund, IBM’s head of blockchain services for financial institutions, said that the stable coin is now available to institutional clients and IBM aims to “put it to use as quickly as possible”.