TETHER Holdings, the issuer of the largest stablecoin in the cryptocurrency market, has created a new synthetic dollar that is backed by gold, the company announced on Monday (Jun 17).
The token was created on the company’s new Alloy by Tether platform and will trade as aUSDT via smart contracts on the Ethereum Mainnet blockchain, where users can mint it through over-collateralisation by depositing another Tether token that tracks the value of gold.
The new offering highlights Tether’s ambitions to expand beyond its USDT stablecoin, a token with a market capitalisation of US$112.5 billion that tracks the value of the US dollar and is backed by reserves of US Treasury bills and other securities and investments.
Alloy by Tether was developed by Moon Gold NA SA de CV and Moon Gold El Salvador SA de CV, both of which are members of the Tether Group. Alloy by Tether was designed to be an open platform that will allow for the creation of other tethered assets, potentially including yield-bearing products, according to to the company.
“Alloy by Tether introduces a novel category of digital assets known as tethered assets, designed to track the price of reference assets through stabilisation strategies such as over-collateralisation with liquid assets and secondary market liquidity pools,” the company said.
Tether Gold has a market capitalisation of about US$573 million and is backed by physical gold stored in Switzerland, according to the company.
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The new aUSDT currency is aimed at users who are looking to make transactions, payments and remittances with a currency similar to the US dollar without having to sell their gold-backed digital assets, Tether’s press release said.
Tether has been raking in cash with its USDT stablecoin amid the current high interest-rate environment. In the first quarter, Tether said it booked a profit of US$4.5 billion, according to its published attestation.
The quality of assets backing stablecoins such as USDT has come under intense scrutiny in recent years, as regulators grew concerned about the liquidity of the reserves backing them and if they could withstand mass redemption requests while under market pressure. In 2021, Tether, which is incorporated in the British Virgin Islands, reached a settlement with the New York Attorney General – without admitting any wrongdoing – over allegations that it lied about its reserves and hid losses. It reached a similar settlement with the Commodity Futures Trading Commission (CFTC) that same year, without admitting or denying the CFTC’s allegations.
Still, the value of Tether’s USDT has been able to track the dollar one-for-one without any major depegs in recent years. BLOOMBERG
