Tied to the mast
According to the company blog, LBXPeg (as the coin will be called) is required because current stablecoins are inadequate due to their “opaque management structures, distribution schedules and auditing processes”.
LBXPeg will be created on the Ethereum blockchain (“as the platform is transparent, efficient and close to reaping the benefits of its upcoming scaling solutions,”) and will be backed by GBP held by the firm in a segregated bank account.
The company says that it will consider pegging the currency to euro and dollar accounts too “to improve both its scope and stability.”
Searching for stability
Stablecoins, or cryptocurrencies backed by fiat currencies/physical assets, are proving increasingly popular options for people worried about the volatility of purely digital cryptocurrencies.
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The most well-known stablecoin is Tether, which claims to be backed by the US dollar. This cryptocurrency has been the subject of some controversy because of its unwillingness to undergo a full audit, which is worrying because there are approximately $2.8 billion worth in circulation.
Other examples of stablecoins include EURS, a euro-backed cryptocurrency launched by Malta-based company Stasis, and the Gemini dollar, a US dollar-backed currency for which billionaire twins Cameron and Tyler Winklevoss just received approval from the state of New York.
In August, Union Bank AG of Liechtenstein become the world’s first regulated bank to issue such a coin. In this case, the Union Bank Payment Coin will be pegged to the value of the Swiss franc and issued in conjunction with the FMA, Liechtenstein’s financial watchdog.
Launched in in November 2017, LBX offers an application with which customers can buy and sell a selection of cryptocurrencies with the pound sterling. It is licensed by the British Financial Conduct Authority.
In March 2018, the firm joined the ‘Faster Payments Service’, a pound sterling-based payment-clearing system invented by local banks (such as Barclays) to replace the outdated ‘BACS’ system.
In May, the company added Bitcoin Cash and Ethereum Classic to its list of available cryptocurrencies, bringing the total up to six. At the time, it was the only exchange in the UK to offer these two cryptocurrencies against the pound. Later that same month, the company added a number of lesser-known cryptocurrencies to its platform. Specifically, these were Basic Attention Token, STATUS, Golem, OmiseGo and 0x, which CEO Benjamin Dives called “unique and exciting prospects” with “reputable backing.” This brought the total up to eleven.