Tethered cryptocurrency will be first stablecoin from EEA-regulated bank
Building upon the principality’s growing reputation as a crypto-friendly place, the Union Bank of Liechtenstein has announced plans to issue its own stablecoin.
The relatively tiny country of Liechtenstein has worked hard in recent times to frame itself as a progressive, attractive place for crypto-centric businesses to base themselves. Taking advantage of its place at the heart of Europe – both geographically, and through its membership of the European Economic Area – it allows companies licensed there to gain access to the wider European Union markets.
Now, the Union Bank of Liechtenstein has announced plans to issue a cryptocurrency that’s value is pegged to the Swiss franc. Called the Union Bank Payment Coin, it will be the first coin of its type issued by a regulated bank – which will work alongside the country’s financial watchdog to oversee its issuance. The bank is a private, rather than a state-owned concern, that is currently “primarily offering corporate banking services to companies in Germany, Switzerland and Austria and the Middle East,” according to its website.
Union Bank frames the move as the “first steps” of a wider plan to “position itself as a full-service blockchain investment bank,” that will eventually adopt blockchain-based operations “throughout its processes and supporting technology.”
Chairman of the Board of Directors M.H. Dastmaltchi is quoted as saying its goal is “to become the world’s first blockchain investment bank and to provide tangible solutions which help drive efficiencies, reduce cost base and open up new revenue opportunities for our customers and intermediaries alike.”
“As a fully licensed and regulated bank,” he continues, “we are in a privileged position to combine all the advantages of traditional banking with the possibilities inherent in the blockchain technology. As such, our fiat-backed Union Bank Payment Coin has the potential to disrupt the approach to international trade and international cross-border transactions.”
The announcement comes alongside news that cryptocurrency exchange giant, Binance, will be providing the technical know-how in a partnership with Liechtenstein Cryptoassets Exchange (LCX) on a project called Binance
LCX – a professional trading platform for security tokens and other cryptoassets, offering an international fiat to crypto exchange and crypto custody.
That stood as perfect example of crypto-companies using Liechtenstein – which is working on its own its own ‘Blockchain Law’, with the full backing of the country’s Prime Minister, Adrian Hasler, who has openly courted players in the industry during the last year.
Binance LCX plans to offer, fiat-to-crypto exchange, with pairing Swiss Francs (CHF) and Euros (EUR) against major crypto pairs, with more added as regulatory approval becomes assured. Whether or not it will adopt the Union Bank Payment Coin is not know, as yet.
So-called ‘Stablecoins’ like the one proposed here, have become a somewhat controversial subject in the cryptocurrency space of late. While the idea of a cryptocurrency linked to the value of fiat currency appears attractive – both to those wanting to trade in easily parsable pairings on markets where fiat-crypto exchange is unavailable, or those wanting to gain the technical advantages of digital money without the volatility – more popular options, like Tether (USDT) have attracted criticism for somewhat opaque accounting practices and questions over their use in market manipulation.
Several other proposals similar to this have popped up in recent months. For example, another crypto-friendly micro-state, Malta, will be home to the EURS coin. Also, a highly influential group of economists are fronting Saga, the fractionally reserved take on the stablecoin concept operating out of Switzerland. It plans to lash itself to the value of a basket of currencies heavily weighted towards the US Dollar.
Upon its launch, one of the people behind the Saga project, former JPMorgan Chase International chairman Jacob Frenkel, said that “While blockchain technologies have gained growing acceptance, encryptic currencies have raised public policy concerns, since they are anonymous, unbacked and are highly volatile.”
“I share these concerns”, he added, “and see great value in Saga’s vision to address them properly.”