Tether, the world’s biggest stablecoin, has faced relentless questioning over reserves backing for USDT, its stablecoin pegged to the dollar. But that hasn’t stopped it from launching stablecoins pegged to various currencies.
Its latest is a plan to launch a sterling-denominated stablecoin on the Ethereum blockchain. Called GBPT, the coin will be launched in early July according to a press release issued by the company.
The company stated that the UK was the “next frontier of innovation and the wider implementation of cryptocurrency for financial markets” and cited the government’s April decision to make the country a hub for cryptocurrencies. In May, UK publication The Telegraph reported that stablecoin legislation would be a part of the next Financial Services and Markets Bill tabled to the Parliament.
A Growing Number of Stablecoins
GBPT brings the total count of stablecoins in Tether’s stable to five. Besides USDT, Tether has already released stablecoins pegged to the Mexican Peso (MXNT), Euro (EURt), and the Chinese Yuan (CNHT).
It does not seem to have created much of a market for these coins, though. As of this writing, the MXNT had a market cap of $958,858 and was changing hands for $0.05 based on data from Coinmarketcap. According to Nomics, another crypto data site, CNHT had a total trading volume of slightly more than $6,000 in the last 24 hours and a market cap of $3.06 million.
With a total valuation of $42 million and a price of $1.06, EURt was doing better. But its position could soon be threatened by Circle’s EuroCoin (EUROC), which has outlined plans to launch a Euro-version of USDC.
Where Are the Reserves?
As usual, Tether has not provided detail about the reserves backing its fiat-pegged stablecoins. Its reserves for USDT have been called into question many times earlier but the company has made only half-hearted efforts to comply with regulation. It has not revealed much detail about the commercial paper in its reserves or about non-US holdings.
In an earlier CNBC interview, Tether CTO Paolo Ardoino said the company had just enough 24-hours’ worth of redemption liquidity for USDT. For its other fiat-pegged stablecoins, though, that estimate might be a generous one. The shareholder capital cushion – the amount of liquidity available to shareholders beyond the Tether tokens already circulating in the market – for CNHT and MXNT is zero, as of this writing. The cushion for its euro-pegged stablecoin is 370.96 euros.
Tether might find the going difficult in the UK. It’s hesitancy to disclose the details of its reserves might be a red flag for regulators there. The Financial Conduct Authority (FCA) has, in the past, cracked down on prominent crypto players that did not comply with existing regulation.