Crypto giant Tether launches sterling-pegged stablecoin

Smartphone with Tether logo is placed on shown US dollars in this illustration taken May 12, 2022. REUTERS / Dado Ruvic / Illustration / File photo / File image

LONDON, June 22 (Reuters) – The major cryptocurrency firm Tether said on Wednesday that next month it will launch a “stablecoin” linked to the British pound, a move that comes as London draws up plans to regulate the fast-growing type of digital currency.

Stablecoins are cryptocurrencies designed to hold a stable value against traditional currencies or commodities such as gold. They try to avoid the volatility that makes bitcoin and other digital tokens impractical for most trades.

The crypto markets were shaken last month when the value of terraUSD, a stablecoin that used a complex algorithm, collapsed, casting the spotlight on the importance of stablecoins for the crypto trading world. read more

The British Virgin Islands-based Tether’s dollar-denominated stablecoin is the third largest by market value, with around $ 68 billion in circulation.

It is the dominant medium for moving funds between crypto and regular cash. Its tokens are underpinned by a mix of dollars, government debt and short-term debt issued by companies.

When the demise of terraUSD triggered sales in the crypto markets, Tether broke its 1: 1 peg to the dollar, shaking investors’ faith in a key cog in the crypto economy.

The UK plans to legislate to bring some stable coins under regulators, as part of a plan to exploit the potential of crypto and blockchain technology to help consumers make payments more efficiently. read more

It said in May that it would adapt existing rules to deal with major stablecoin collapses. read more

“We believe that the UK is the next front line for blockchain innovation and the wider implementation of financial markets for cryptocurrencies,” Tether Chief Technology Officer Paolo Ardoino said in a statement, adding that the company would work with UK regulators.

The UK Treasury Department did not immediately respond to a request for comment.

In addition to its dollar-backed currency, Tether offers tokens linked to the euro, offshore Chinese yuan and Mexican peso.

Reporting by Elizabeth Howcroft and Tom Wilson; Edited by Hugh Lawson

Our standards: Thomson Reuters Trust Principles.