Stronghold is partnering with IBM to launch USD Anchor, which will utilize the Stellar blockchain platform to verify transactions. USD Anchor will be backed one-for-one with the US dollar and will be held by Prime Trust, who will, in turn, deposit the cash at FDIC-insured banks.

IBM’s interest in the partnership will be geared toward exploring wants to help banks and financial institutions process payments in a more secure and rapid manner. The aim of this new “stablecoin” is to find ways to utilize a digital currency while reducing the volatility that is characteristic of most cryptocurrencies on the market.

The elephant in the room is Tether, an earlier and well-known dollar-backed “stablecoin” which has been beset by controversy—accusations that it had been used to prop-up Bitcoin prices during the last spike—and concern, namely that it may not have the adequate US dollar reserves that it claims.

What makes this development interesting particularly for cryptocurrency enthusiasts is that it is occurring within the backdrop of a slow but steady institutional recognition of the potential “inevitability” of tokenization:

  • Bitcoin prices jumped on the news that ETF giant BlackRock has set up a working group to look into cryptos and blockchain. Having railed against cryptocurrencies in the past, BlackRock CEO Larry Fink nevertheless admitted that as a “big student of blockchain” the working group, far from being new, has been studying the technology since 2015.
  • On a separate front, Bloomberg reported that the CFA Institute is adding cryptocurrency and blockchain topics to its grueling Level I and Level II curricula starting next year. This move has been taken as an indication that both technologies may be officially recognized not as passing fads but as operational necessities, if not in immediate implementation then in theory and anticipation.

The focus is now on how long blockchain technology can be utilized apart from the tokenization functionalities that initially spawned it. Another question is how asset-backing may affect the value (or perceived value) of digital tokens and whether such backing may encourage more widespread cryptocurrency adoption.

 


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