Tether Operations, the issuer of the world’s largest dollar-pegged stablecoin, is set to introduce a new token in July – this one backed by the British Pound Sterling.
The “GBP₮” token will be fully backed by Sterling-denominated reserves held in the custody of financial institutions that fall within the regulatory perimeter, the company announced Wednesday.
GBP₮ will join four other fiat-currency pegged tokens Tether has in the market: the U.S. dollar-pegged USD₮, the Euro-pegged EUR₮, the offshore Chinese Yuan-pegged CNH₮, as well as the recently launched MXN₮, the Mexican Peso-pegged stablecoin.
“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”.
Demand for stablecoins has been surging
Acting as a sort of safe haven where crypto traders can park their assets in volatile markets, GBP₮ will operate initially is an Ethereum-based ERC-20 coin, which makes it easy for wallets, exchanges and other smart contracts to interact with the token. Tether, which is closely affiliated with crypto exchange Bitfinex, works across a diversity of different blockchains, including Algorand, Bitcoin Cash’s SLP, Ethereum, EOS, Liquid Network, Omni and Tron.
The Sterling stablecoin is launching at a time of major declines in the broader cryptocurrency market, which has led crypto firms to fail and erase billions of dollars of digital assets.
While lawmakers in the European Union are in the process of setting up rules for stablecoin issuers, the UK regulators haven’t yet decided whether to introduce a digital version of the British pound. However, the government is reportedly exploring the use cases and risks involved if it were to proceed. The Bank of England also set up a new unit dedicated to exploring a central bank digital currency.
Demand for stablecoins in the e-commerce and payment space has been surging as the fiat-backed tokens allow users and merchants to avoid volatility. Moreover, online retailers and payment gateways benefited from faster, cheaper transactions as compared to credit cards and traditional payment systems.
This trend was driven by growing interest in decentralised finance (DeFi) and OTC desks that use the token to settle block trades over-the-counter.
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