It’s a frenetic month for stablecoins, and the trend is further accentuated by another development as a London-based startup announces its own plans to develop a cryptopound.

In the US, a stablecoin is a cryptocurrency pegged against the USD, giving it stable-price characteristics, seen by some as a safe hedge against the volatility of conventional cryptocurrencies such as Bitcoin or Ethereum. Currently, they are underutilized apart from when traders use them to guard their positions during bear markets.

Last month, announcements of stablecoin launches appeared to have been coming from east to west, beginning with news of Gemini and Paxos being given the go-ahead to launch their own stablecoins by the New York State regulator. This was followed by Hong Kong-based Grandshores Technology Group announcing a funding round for a Japanese Yen-based stablecoin.

With the proposed launch of an Australian stablecoin last week by crypto exchange Bit Trade and the Emparta infrastructure, followed by the Goldman Sachs/Circle announcement of a US Dollar coin to end the week, this latest move from the UK was almost unsurprising.

After yesterday’s development in the UK, there seems to be no stopping the charge as the London Block Exchange (LBX) announced its plans to launch the LBXPeg, a stablecoin backed by the UK pound. LBX hasn’t named its banking partner yet but has suggested that one-for-one reserves will be held by a third party bank. LBX CEO Benjamin Dives claims this crypto pound is to be the first of its kind to be launched in the UK and is optimistic about the speed of development of the new coin:

“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… We would be ready for the first cryptopound to be minted in the next 10 days.”

LBX has stated the current stablecoin market needs disruption due to many firms’ lack of transparency, commenting that “many available stablecoin offerings are inadequate for the needs of businesses, traders and consumers” citing  “opaque management structures, distribution schedules, and auditing processes.”

Professor of Economics at UC Berkeley, Barry Eichengreen, suggests that stablecoins, seen by some as highly attractive for investment due to them being pegged to one fiat currency aren’t as stable as the name suggests. He argues that stablecoins contain certain “weaknesses”, and are not only expensive but require a reserve that is equal to or more than the coins in circulation to ensure market stability, making government regulation complex.

 

Follow BitcoinNews.com on Twitter: @BitcoinNewsCom

Telegram Alerts from BitcoinNews.com: https://t.me/bconews

Want to advertise or get published on BitcoinNews.com? – View our Media Kit PDF here.

Image Courtesy: Pixabay
Comments are closed.

Check Also

FATF to Enforce Time Restriction on Exchanges’ Customer Information

The Financial Action Task Force (FATF), who met last week for another round of talks to de…