Coinbase (NASDAQ:COIN) said it would offer a pound-based stablecoin, tGBP, backed by fiat. The company announced the new issuance during UK Fintech Week, stating that a stablecoin was necessary to position the UK as a true global hub for crypto. The stablecoin is available now.
Coinbase is working with BCP Technologies to issue tGBP. The company is regulated by the UK Financial Conduct Authority.
Coinbase outlined its recommendations for the UK to grow the stablecoin ecosystem:
- Ensuring stablecoins can compete on a level playing field with other forms of digital money: for example, the UK should not introduce overly punitive prudential requirements and should allow rewards on stablecoin holdings.
- Ensuring a proportionate approach to backing assets: for example, a requirement for systemic stablecoin issuers to hold 40% of reserves in unremunerated cash at the central bank is not risk-based.
- Avoiding overly cautious caps for systemic stablecoins: Implementing a “regulatory speed limit” or cap on stablecoin issuance is effectively a cap on innovation.
- Allowing stablecoins to be used as the settlement asset in tokenization of wholesale markets: this should be the case outside of the Sandbox, in a real-world environment.
Currently, UK authorities are proposing rigorous restrictions on stablecoin holdings and usage. The proposal may be loosened over time.
Regulated stablecoin issuers are prohibited from paying interest or any form of yield to holders. This extends to third parties to separate stablecoins from deposits yet workarounds will inevitably emerge.