So-called stablecoin company Tether is launching a cryptocurrency pegged to the British pound as the United Kingdom tries to embrace digital currencies and global regulators grow wearier of stablecoins.
Tether announced its sterling-pegged stablecoin called GBPT, will launch in early July and will be built on the Ethereum blockchain. Its value will be pegged on the 1:1 ratio at £1.
Criticism over stablecoins has mounted since the algorithmic Terra USD crashed in May, causing liquid cryptos such as Bitcoin to plunge and people to lose their crypto investments.
Unlike Terra USD, the GBPT will not be an algorithmic stablecoin, which uses cash, other assets and a complex mix of code to stabilise to maintain its peg with the fiat currency it tracks.
In contrast, GBPT is an asset-backed stablecoin, meaning tokens are fully backed by cash or cash equivalents.
However, Tether and other cryptocurrencies took a hit amid the Terra USD saga and along with other contributing factors the crypto sector has been in decline all year.
The most popular crypto Bitcoin is currently trading around the $20,000 (€19,000) mark, significantly lower than its historical high of $69,000 (€65,000).
In April, the UK’s government and finance ministry HM Treasury said it would make the country a global crypto hub and use stablecoins in its regulatory framework.
“We believe that the United Kingdom is the next frontier for blockchain innovation and the wider implementation of cryptocurrency for financial markets. We hope to help lead this innovation by providing cryptocurrency users worldwide with access to a GBP-denominated stablecoin issued by the largest stablecoin issuer,” said Paolo Ardoino, CTO of Tether.
“Tether is ready and willing to work with UK regulators to make this goal a reality and looks forward to the continued adoption of Tether stablecoins”.