The Bank Of England has announced that it is considering issuing a Digital Pound. Given the recent controversy surrounding USDT, following the Securities and Exchange Commission (SEC) filing a lawsuit against Tether, the company backing USDT, I think this could be the best moment to consider adopting a Pound Sterling stablecoin, which would be backed by the Bank Of England.
The SEC filed a lawsuit against Tether, accusing the company of issuing significant amounts of unbacked USD, which caused over $1 million in losses to the global exchange market.
And regardless of the veracity of this claim, the interest expressed by the Bank Of England in creating a digital currency that reflects the economic worth of the GBP presents an opportunity for Tether to become the predominant issuer of GBP within the cryptocurrency market. This move would potentially promote the adoption of cryptocurrency and blockchain technology in the UK and globally, as a stablecoin pegged to Pound Sterling and supported by the Bank of England could potentially serve as a symbol of validation and trust.
Taking into consideration the exchange rate of the Pounds Sterling against the US dollar as 1 GBP : 1.24 USD as of April 2023. One can ascertain that many cryptocurrency users would readily adopt a stablecoin pegged to the British Pound, both for trading and as a way to store their cryptocurrency savings. Such a development could potentially open up the cryptocurrency market to other world currencies, leading to a truly borderless decentralized finance (DeFi) ecosystem. Ultimately, this could also help drive global adoption of DeFi forward given that most countries would have a stablecoin pegged to their currency.
What Does This Mean For USDT?
I'm not sure of the end motive of the legal action taken by the Securities and Exchange Commission (SEC) against Tether. Is it to get compensation of some sorts or to actually stop the issuance and utilization of the USDT in the cryptocurrency market? If their sole concern was the insufficiency of USD backing the USDT, then maybe a resolution could have been reached through negotiation, compensation paid if necessary, and then a closure of the loophole. However, it appears that the SEC's action against Tether is more of a personal matter.
The possibility that the existence of a USD pegged stablecoin in the cryptocurrency industry is something the SEC does not currently approve of should be also considered. Whatever the case maybe, introducing a stablecoin pegged to the Pound Sterling would obviate the necessity for a stablecoin pegged to the US Dollar, thus reinstating stability and confidence in stablecoins and reducing tension. Whether or not the SEC reaches an agreement with Tether or if either party prevails in the lawsuit, it will have minimal impact on the investments of individuals holding stablecoins issued by Tether.
Will The Bank Of England Agree To A Stablecoin Pegged To The Pound Sterling?
A friend of mine told me and I quote "Europe is slow, especially Britain, when it comes to tech innovation". If this statement is factual in the least of ways then it is remarkable that they've introduced a digital form of currency which is not to be confused with a cryptocurrency stablecoin. The Digital Pound as they call it is meant to serve as a digital currency that will serve the same functions as fiat currency without replacing it. Considering Europe's relatively slow pace in the technological race, it is possible that they may not readily embrace cryptocurrency and blockchain technology.
By engaging in favorable negotiations and collaborating with the right people, Tether and the Bank of England have the potential to create a stablecoin for Pound Sterling, that can be known as GBPT. The initiative to adopt digital currency demonstrates Europe's recognition of the significance of digital assets that represent tangible assets. If the Pound Sterling stablecoin is approved and developed, it could have a substantial impact on the blockchain industry and the decentralized finance ecosystem. However, it is important to consider the likelihood of Tether independently supporting a Pound Sterling stablecoin if partnering with the Bank of England is unsuccessful and SEC persists.
What do you think?