The first ever British pound sterling-backed stablecoin has been launched by an FCA-registered crypto firm, according to multiple reports.

Tokenised GBP (tGBP) has been launched by BCP technologies and is said to be “backed 1:1 by reserves held in a segregated account at a UK-regulated financial institution,” CoinDesk has reported.

The crypto industry remains largely unregulated in the UK, but efforts are being stepped up to introduce legislation for digital assets including stabecoins.

Stablecoins are crypto assets that draw their value and stability by being attached to or referencing a flat currency, in this case the pound sterling. The firm behind tGBP says the fact that there are not many stablecoin options in the GBP will help them draw then attention of potential buyers. It also hopes to use the benefits of blockchain technology to its advantage, especially when being used for cross-border payments.

According to Benoit Marzouk, CEO, BCP Technologies: “tGBP supports a broad range of use cases: GBP self-custody for retail and corporates to bring an alternative from banks (and their inherent fractional reserve risk), cross-border payments, institutional collateral management, a GBP option for DeFi lending protocols and a GBP on-chain access for bitcoin-backed loans.”

Hannah Meakin, a partner at Norton Rose Fulbright, told GRIP: “The launch of tGBP marks an important milestone in the evolution of the UK’s digital asset ecosystem. As a new British pound-backed stablecoin issued by an FCA-registered crypto firm, it sends a strong signal of growing regulatory maturity and market readiness for fiat-referenced digital currencies.”

Regulation

The announcement comes only a week after the UK’s FCA launched a consultation process on issuing stablecoins, crypto custody and financial resilience of crypto asset firms.

The UK regulator says it wants to “develop a safe, competitive and sustainable crypto asset sector – one that enables innovation and is underpinned by market integrity and consumer protection.”

The FCA says its proposed rules aim to achieve two main objectives. First, it wants to make sure that the stablecoins maintain their vaue and, second, “that customers should be provided with clear information on how the backing assets are being managed.”

Also last week, the FCA launched a separate consultation process on its proposed prudential rules and guidance for issuing qualifying stablecoins and safeguarding qualifying crypto assets.

At present the stablecoin market, which has a $250 billion market cap according to some estimates, is dominated by US firms such as Tether and Circle.

Their respective stablecoins, the USDT and the USDC, are pegged to the US dollar, which means options in other currencies are currently limited.

CEO Marzouk said: “Our vision is to abstract the complexity of blockchain with the familiarity of a GBP denomination, ultimately replacing GBP e-money with our GBP stablecoin.”

According to Meakin: “Initiatives like tGBP could help pave the way for broader adoption of regulated stablecoins in payments, settlements, and other areas.”