Joining Tether's Menu of Stablecoins - GBPT Pegged to the British Pound Sterling

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Even with the devastation left behind by the Terra/UST crash and Tether's shrinking market decline [See, Nagoda, K. Tether's Market Cap at 8 Month Low. (Accessed June 23, 2022) Tether will be adding to its stablecoin offerings a new cryptocurrency pegged to the British pound sterling (GBP). "Tether Operations Limited (“Tether”), the company operating the blockchain-enabled platform tether.to that powers the largest stablecoin by market capitalization of over US $68 billion, has announced that it will be launching Tether tokens (“GBP₮”) pegged to the British Pound Sterling in early July. Initial blockchain support will include Ethereum" [Tether. Tether To Launch GBP₮, Tether Tokens Pegged to the British Pound Sterling. (Accessed June 23, 2022)].

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GBPT joins a family of four other fiat currency-pegged Tether (USDT) tokens, including the largest stablecoin by market capitalization, USDT. Other stablecoins include the euro-pegged EURT, the offshore Chinese yuan-egged CNHT as well as the recently launched MXNT, the Mexican peso-pegged stablecoin.

[Partz, H. Tether to launch GBPT stablecoin pegged to British pound sterling. (Accessed June 23, 2022)].

"GBP₮ will be a stable digital asset that is pegged 1:1 to the British Pound Sterling. GBP₮ will be built by the trusted team of developers behind Tether USD₮ and operate under tether.to. The creation of GBP₮ will put British Pounds on the blockchain and provide a faster, less costly option for asset transfers" [Tether, supra].

On April 4, 2022, the HM Treasury published: "The government has today announced moves that will see stablecoins recognised as a valid form of payment as part of wider plans to make Britain a global hub for cryptoasset technology and investment" [HM Treasury. Government sets out plan to make UK a global cryptoasset technology hub. (Accessed June 23, 2022)]. The Treasury further added:

The government intends to legislate to bring stablecoins – where used as a means of payment – within the payments regulatory perimeter, creating conditions for stablecoins issuers and service providers to operate and invest in the UK.
By recognising the potential of this technology and regulating it now, the government can ensure financial stability and high regulatory standards so that these new technologies can ultimately be used both reliably and safely.

[Id].

In this regard, Tether notes: "This initiative, paired with hundreds of millions of people using crypto around the world, makes the United Kingdom a prime location for the next wave of industry innovation" [Sephton, C. Tether is Launching a Brand-New Stablecoin. (Accessed June 23, 2022)].

Tether hopes to facilitate the British initiative.

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 [...] Tether is ready and willing to work with U.K. regulators to make this goal a reality and looks forward to the continued adoption of Tether stablecoins.

[Partz, supra].

Final Thoughts

Last month, algorithmic stablecoin TerraUSD (UST) suffered a catastrophic collapse. This translated to a loss of investor money in large sums and the subsequent discontinuation of the stablecoin. Part of the reason widely accepted as triggering the UST implosion was its questionable operational mode. Unlike Tether, which keeps near-cash investments as a backup, UST used a different method. The stablecoin was without cash reserves and only maintained its dollar parity via a series of complex and programmable codes.

[Ajiboye, T. Tether to Issue Pound-Pegged Stablecoin GBPT In July. (Accessed June 23, 2022].

This Terra/UST collapse caused a wave of redemptions in May 2022 as investor faith in stablecoins diminished. Nonetheless, Paolo Ardoino, Tether CTO, "believes the event served as proof that Tether can handle such redemptions “without the blink of an eye,” while maintaining its peg" [Throuvalas, A. Tether to Launch Stablecoin Pegged to British Pound Sterling. (Accessed June 23, 2022)].

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