Launch of digital asset to track value of £1 comes despite contraction of cryptocurrency sector
Tether, the controversial “stablecoin” that underpins more than $60bn of the crypto economy, is launching a British version to capitalise on the UK government’s desire to make Britain a global cryptocurrency hub.
Like its US dollar counterpart, of which $67bn (£55bn) is actively traded on cryptocurrency markets, the digital asset will be built on the Ethereum blockchain, but its value will be set at £1.
“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, Tether’s chief technology officer.
“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,” added Ardoino, who is also CTO of the cryptocurrency exchange Bitfinex, a dual role shared by the two companies’ chief executives, chief operating officers, chief financial officers and general counsels.
The launch of the GBPT token comes at an inauspicious time for cryptocurrencies. The sector as a whole has contracted from almost $3tn of trading tokens to less than $1tn, and the flagship cryptocurrency, bitcoin, has fallen from a high of $69,000 to less than $20,000. Tether ‘slargest token, the USD tether, has fallen by more than $8bn in just over a week as holders race to cash out into safer assets, and the total value circulating has dropped by nearly $20bn since the peak.
Despite the falls, Tether says its business has never been more stable, and points to the speed with which the billions were withdrawn as evidence of its firm foundations. In early June, the company put out a statement boasting: “Tether recently faced redemption requests for $10bn of USD₮ redemptions within a single week and was able to fulfil all requests in full with ease; $10bn of redemptions represented more than 12% of outstanding USD₮ tokens. No bank in the world could process the withdrawal of 12% of its outstanding liabilities within a week.”
The company claims that every Tether is backed one to one by assets held in reserve, which is how it maintains its stability. It is a different claim from the one it made when it launched its business: that every Tether was backed by US dollars held in reserve. An investigation from the New York attorney general’s office concluded that claim was a “lie” and Tether was barred from operating in New York and fined $18m.
Despite the crypto crash, the UK government says it continues to support the sector, and singled out stablecoins as an area needing regulatory encouragement.
A Treasury spokesperson said: “We are firmly committed to putting the UK’s financial services sector at the forefront of cryptoasset technology and innovation. 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 forthcoming financial services and markets bill will set up the framework for regulating stablecoins in the UK.”
The Financial Conduct Authority and Bank of England declined to comment.
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