The UK government has noted that cryptocurrency will play a part in the country’s strategy to increase its economic competitiveness after its exit from the European Union. The UK Treasury has since announced a set of initiatives aimed at helping to achieve its mission to convert the UK into a global cryptocurrency hub. This mission comes with new, promised regulations that will allow people to confidently use stablecoins as a form of payment in the UK.
If we take a look at global currencies, in terms of daily turnover, the British Pound (GBP) is currently the fourth most traded fiat currency in the world, according to the Bank for International Settlements. Fiat money refers to a government-issued currency that is not backed by a commodity such as gold. gives central banks greater control over the economy because they are able to control how much money is printed. Most modern paper currencies, such as the GBP, are considered fiat currencies.
As the UK works towards becoming an international cryptocurrency hub, more and more partnerships between the company and cryptocurrency firms are being formed. With the crypto adoption rate increasing in the UK, digital asset entities are looking to branch out and collaborate with the country’s growing crypto ecosystem. There has been a lot of excitement around stablecoins – cryptocurrencies that are designed to have a relatively stable price. Stablecoins are typically achieved by being pegged to another commodity or currency like the USD, or by having their supply regulated by an algorithm. Stablecoins were originally established to give cryptocurrency users reliable onramps to trading services. Over the years, and as crypto has become more popular, their use cases have grown to include payments, remittances, lending, and escrow services. As a result of this, stablecoins now play an integral role in the decentralized finance, or Defi, market.
The most recent event regarding stablecoin in the UK is a big one. Blockchain fintech firm, the black fridge has launched a new stablecoin that is wholly backed by the GBP. This new advancement could potentially mean opening the door to broader cryptocurrency adoption of digital assets in the UK and its Crown Dependencies, Channel Islands, and the Isle of Man. The newly launched stablecoin is called “pound token” and it trades under the ticker “GBPT”. This new GBP-backed stablecoin will be available for trading on Gate.io, Bittrex Global and Uniswap, and possibly as confirmed by the black fridge. GBPT is said to be fully backed by the GBP, which means that every token issued will have an equivalent value held in reserves. The stablecoin’s reserve status will be regulated by the Isle of Man Financial Services Authority, which will oversee deposit and investment businesses in the self-governing British Crown Dependency. Big Four accounting firm, KPMG, has been appointed to audit pound tokens’ reserves — a process that will take place on a monthly basis.
Poundtoken’s COO, Nicholas Maybin has expressed that stablecoins have now become an “integral part of the crypto sector”. Thus making them a big potential contributor to the UK’s crypto mission. As mentioned earlier, the GBP is one of the most widely traded currencies in the world, to the Bank for International Settlements, or BIS. The BIS’ 2019 Triennial Central Bank Survey found that the Pound Sterling’s share of global over-the-counter foreign exchange turnover was 12.8%, placing it fourth among active currencies. By marrying the GBP and stablecoins, the UK is on the right track to becoming a global crypto hub as planned.
While the landscape for stablecoins is still in its juvenile stage, its potential has led the world’s leading accounting firms to explore ways to implement the emerging technology in their work. KPMG taking on the suit responsibilities for pound token is a key example of this.