The London Block Exchange, which does over-the-counter crypto trades and operates a crypto exchange, said on Friday that it had received permission from an unnamed banking partner to launch a new cryptocurrency, dubbed the LBXPeg, backed by reserves of UK sterling. The one-for-one reserves will be held in an account at the third party bank.
LBX's CEO, Benjamin Dives, told Business Insider the reserves will also be regularly audited by a top accountancy firm. He added that he believes the LBXPeg will be the first so-called "stablecoin" to be pegged to the pound. latest plans come amid a boom in activity and interest in "stablecoins." These are cryptocurrencies where the price is pegged to real-world assets, usually the dollar. The idea is to give cryptocurrencies the price stability of a mainstream currency but still retain their interoperability and digital nature.
Circle, the cryptocurrency company backed by Goldman Sachs, this week became the first issuer of US Dollar Coin, a new stablecoin pegged to the dollar it helped to develop. The Winklevoss twins, who helped develop Facebook, have also announced their own stablecoin project. A report from Blockchain earlier this week said there are over 50 stablecoin projects currency in development.
Stablecoins shot to popularity within crypto last year thanks to the rise of Tether, a cryptocurrency pegged to the dollar. Many crypto exchanges have been shut out of the mainstream financial system by banks due to compliance concerns.
Tether allows them to offer dollar-like liquidity even though they cannot accept dollar deposits. Blockchain's report found around 60% of bitcoin trades now occur in Tether globally.