There are still new initiatives in the works despite the raging bear market and the crippling economics. Our focus today is on Tether and its plans to launch a new digital asset in its efforts to maintain its dominance in the stablecoin industry.
Tether To Introduce GBP₮
Tether Operations Ltd., popularly known as Tether, the company behind the first and leading stablecoin in the crypto market, US Dollar-pegged USD₮, is set to release another stablecoin. Tether.to announced on its blog that it is preparing to launch GBP₮, a stablecoin pegged to the British Pound Sterling, as a way to provide a faster, less expensive option for blockchain asset transfers. According to the post, the new stablecoin will be initially supported by the Ethereum blockchain and will be introduced in early July.
Tether is a stablecoin pioneer and already hosts several fiat-pegged digital assets on the blockchain, including;
- the U.S. dollar-pegged USD₮
- the Euro-pegged EUR₮
- the Chinese Yuan-pegged CNH₮
- the Mexican Peso-pegged MXN₮
Paolo Ardoino, Chief Technology Officer (CTO), had this to say about the development.
“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.”
This deduction was made in response to an exciting development in April when the UK government announced on its official website in a message from Her Majesty's Treasury (HM Treasury) that stablecoins will be recognized as a valid form of payment as part of broader plans to make Britain a global hub for crypto-asset technology and investment. The announcement stated unequivocally that stablecoins will be regulated in the United Kingdom, paving the way for their use as a form of payment in the country. "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," Ardoino added in response to the previous regulatory announcement.
GBP will provide cryptocurrency users with a stable digital asset that is pegged 1:1 to the British Pound Sterling, and Tether claims that the British Pound Sterling will be added to the blockchain as a result of the introduction of this new token, increasing the British Pound Sterling's utility and dominance among other world currencies.
The decision to launch a new product amid such harsh market conditions, as well as the recent controversies in the space, begs the question of whether and how stakeholders—traders, exchanges, regulators, and governments—will receive the token. Let's go over the events surrounding Tether that have led up to this point.
Stablecoins are known to be very essential digital assets in the crypto-sphere because of their high utility to facilitate transactions on exchanges and their reduced volatility, that is known to hedge against market price downturns. This has not been the case in this bear season, however. This year saw the most trying times for stable coins as May saw the de-pegging of stablecoins that are supposed to maintain a constant market value of $1.
The price of the algorithmic stablecoin TerraUSD (UST), which is supposed to maintain a $1 peg, de-pegged on May 9 and dropped to a “crashed” status, signaling the death of the Terra ecosystem and throwing the crypto market into a pandemonium that sheared massive amounts off the market.
TeterUSDT, despite not being an algorithmic stablecoin, also depegged and fell to a record low of $0.95 last month. Ardoino took to his Twitter on May 12, the morning of the incident, to announce that the company maintained redemptions at $1 with over 300 million withdrawals processed “without a sweat drop.” While the move was commendable, some questioned the volatility of the coin and the ability of the large reserves to sustain the ‘damage control’ style redemptions.
Nicolas Bonnet, crypto operations manager at French broker Aplo, said some traders were exploiting the drop in tether by buying the token for less than $1 and then redeeming it for a dollar. Despite Tether’s effort at managing the situation, its market cap fell below $70 billion for the first time in seven months last month. This blew away as the market price found its way to its pegged rate.
Another event that raised eyebrows was the fact that around $11 billion, or 13%, was withdrawn from the company’s reserves within 10 days. Rumors began circulating on social media that Tether’s business paper portfolio is reportedly 85% backed by the Chinese language/Asian paper and is buying and selling at a reduction of 30%.
Tether quickly responded to this unease and rumors through its CTO, Ardoino that Tether had diminished its CP holdings from $40 billion to $15 billion over the previous eight months, and that the percentage withdrawn in the short period only represented “digital belongings that signify solely a tiny a part of Tether’s reserves.”
To further ensure transparency and rebuild confidence in the company and token, Tether is to subject itself to a full audit with a high 12 agency on the issue of its reserves.
Tether recently suffered a large Distributed Denial-of-Service attack, which increased its on-site requests from 2k requests per five minutes to an impressive 8M requests per five minutes.
The June 18 attack was confirmed in a tweet by Paola Ardoino, who stated that the company received a ransom request from the hackers in order to avoid mass DDOS attacks. He also stated that the attack was not the first of its kind and that it had been mitigated. Using Cloudflare, Ardoino determined the primary ASN to be AS-CHOOPA.
Read Also: Companies Hiring In The Crypto 2022 Bear Market
Following the Terra crash, stablecoins no longer appear to be the crypto market's haven. With the crypto market still down, rising inflation in the United States, inflation in the United Kingdom reaching a record high of 9.1 percent, the highest level in 40 years, and looming stablecoin regulations, we appear to be entering a new, uncharted phase of the token class.
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