Payments software company Novatti has entered the digital currency market, launching a utility token which it claims is the first Australian dollar-backed utility token.

The token sits on the Stellar Network, a distributed ledger network that allows any currency or asset to be digitally issued, transferred and exchanged over the internet.

Novatti says consumers and institutions will be able to use the Novatti platform to accept and settle payments in Australian dollars, as well as access foreign exchange markets. The token is backed one-to-one by Australian dollars.

“As the Novatti tokens are tethered to Australian dollars, the tokens in circulation will always have an equal matching reserve to Australian dollars. This gives consumers and institutions the freedom to use a digital currency and the Stellar network without fear of fluctuation in the underlying value of the digital currency.”

Novatti’s reserve holdings will be held by its subsidiary Flexewallet, which has an Australian Financial Services Licence for non-cash payments and is registered as a remittance network provider with regulator Austrac.

Novatti will be the Stellar Network’s first Australian dollar anchor – an entity entrusted to create tokens for the network. As an anchor, Novatti will accept inbound payments, process withdrawals and transfers, and initiate transactions.

Stellar Network was launched in 2014. It has partnered with groups such as Deloitte and IBM on cross-border payment initiatives.