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, which will launch in early July and will be built on the Ethereum blockchain. Its value will be pegged on the 1:1 ratio at one British pound.
Crypto markets were rocked last month when the value of terraUSD, a stablecoin that used a complex algorithm, collapsed, throwing a spotlight on the importance of stablecoins to the crypto trading world. British Virgin Islands-based Tether's dollar-pegged stablecoin is the third-largest by market capitalization, with some $68 billion in circulation.
It is the predominant medium for moving funds between crypto and regular cash. Its tokens are underpinned by a mixture of dollars, government debt, and short-term debt issued by companies. As the demise of terraUSD sparked a sell-off in crypto markets, Tether broke its 1:1 peg with the dollar, shaking investors' faith in a key cog in the crypto economy.
Britain plans to legislate to bring some stablecoins under the oversight of regulators, part of a plan to exploit the potential of crypto and blockchain technology to help consumers make payments more efficiently.
A stablecoin is a cryptocurrency designed to be redeemable for a fixed amount of a less volatile monetary good, such as a fiat currency. Such coins are designed to provide efficiencies and utilities to blockchain payments currently seen with traditional currencies.
Regulators worldwide have been paying close attention to the benefits and risks associated with stablecoins, from their use in cross-border remittances to illicit transactions. However, the United Kingdom announced intentions to become a "crypto-asset technology hub" in April, inspiring Tether to accommodate its services for the region's national currency.
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