- Bitcoin lost more than 60% of its value in a few weeks and the cryptocurrency market is in turmoil.
- Stablecoins are in the midst of questioning after the Terra USD crash.
- Tether seeks to consolidate its first place among stablecoins and launches a token pegged to the British pound. UK regulators turn on alerts.
Tetherthe company behind the world’s largest stablecoin of the same name, confirmed this Wednesday, June 22, that is going to launch a stablecoin linked to the value of the British pound.
The launch will materialize on July 1.
The crypto company’s decision comes as the UK is planning a mega regulation of the digital currency market, overwhelmed by its rapid growth.
In parallel, pound-pegged Tether is launched when the crypto market is crashing, with precipitous falls of all tokens, including bitcoin.
Stablecoins are cryptocurrencies designed to maintain a stable value against traditional currencies. It is also linked to other less unstable assets, such as commodities or gold.
The objective is avoid the volatility that makes Bitcoin and other digital tokens unreliable and low practicality when trading.
Tether launches stablecoin as bitcoin price crashes
The cryptocurrency market has been rocked in recent weeks by the collapse in the value of Terra USD, another stablecoin.
This stablecoin used a complex algorithm to maintain stability against the dollar, but it crashed.
This highlighted the importance of stablecoins to the world of cryptocurrency trading.
The dollar-pegged stablecoin of Tethera company based in the British Virgin Islands, it is the first of the stablecoins in the world and the third largest if all cryptos are considered.
With $68.1 billion in circulation, Tether trails only giants Bitcoin and Ether.
Tether is the most used vehicle to make transactions in the crypto universe because its tokens trade one to one with the dollar.
When Terra USD crashed, there was a sell-off in the crypto markets and Tether broke its 1:1 parity with the dollar for a few hours, causing panic in the crypto markets.
In addition to its dollar-backed currency, Tether has tokens related to the euro, the offshore Chinese yuan, and the Mexican peso in circulation.
Stablecoins in the spotlight
Stable currencies, or stablecoins, are at the center of the debate: regulators and financial authorities, both in the United States and Europe, say they are dangerous and vulnerable.
Bank of France Governor Francois Villeroy de Galhau said at a conference last month that crypto assets could disrupt the international financial system, so they must be regulated in a consistent and unified manner across jurisdictions.
He also said that stablecoins are misnamed, and are a source of risk.
Fabio Panetta, a member of the executive board of the European Central Bank, also spoke on the subject, calling stablecoins “vulnerable to runs”.
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