Cryptocurrency company Tether is planning to launch a new stablecoin tied to the British pound next month.
Tether is known for its stablecoins, a form of cryptocurrency that has a value tied to the value of something else – often fiat currencies.
The company has previously launched coins tied to the US dollar and Chinese Yuan. Tether will soon add pound sterling to its list of currencies tied to a digital coin.
Paolo Ardoino, CTO of Tether, said the company views the UK as “the next frontier for blockchain innovation and the wider implementation of cryptocurrency for financial markets”.
Ardoino added: “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”.
Stablecoins are generally seen as safer than other types of cryptocurrencies, including Bitcoin and Ethereum, because in theory their price is less volatile.
Stablecoins can drop in value, however, as has been shown by Luna, which last month dropped below the value of a dollar.
Tether has sparked controversy in the past over claiming each USDT was backed one to one by US dollars held in reserve, a claim that the New York Attorney General’s office found to be false. It now claims each Tether is backed one to one with assets held in reserve.
Treasury embraces stablecoins
The launch of a digital currency tied to the pound sterling comes as the British Treasury prepares to introduce legislation that brings stablecoins into the UK economy for payments.
Little is currently known about how the Treasury plans to do this. However, the department has confirmed it will feature in the upcoming Financial Services and Markets Bill, announced by Prince Charles during the Queen’s Speech.
“We are firmly committed to putting the UK’s financial services sector at the forefront of cryptoasset technology and innovation,” a Treasury spokesperson told UKTN.
“This includes creating the conditions for stablecoins – when used as a means of payment – to operate and grow safely while mitigating potential financial stability risks.”
The spokesperson added: “The forthcoming Financial Services and Markets Bill will set up the framework for regulating stablecoins in the UK.”
Lawyer and crypto regulation specialist James Kaufmann believes the timing of Tether’s GBP launch being so close to the Treasury’s announcement might not be entirely coincidental.
“It is easy to think that Tether’s decision to launch a sterling stablecoin is timed to be in place ahead of the rules being introduced,” Kaufmann told UKTN.
“In my opinion, the Treasury’s approach to stablecoin regulation in the UK is a weakly veiled measure to clear the field for a Bank of England issued/backed sterling stablecoin.”
He added: “Tether entering the market is a real challenge for the “Powers That Be” in the UK. It will be fascinating to see how they address GBPT. I think it may become a fight for the heart and mind of crypto.”
Kaufmann described a centralised Bank of England coin as “the antithesis of what crypto has sought to be”.
“Crypto, at its core, was born out of the desire for decentralising, disintermediation and lack of trust in central authorities.”
It comes as Conservative MP Matt Hancock this week reiterated his support for crypto despite the market crash and what he called “patronising” regulators.