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Crypto stablecoin giant Tether introduces a new synthetic dollar backed by gold
Tether Holdings, issuer of the largest stablecoin in the cryptocurrency market, has created a new synthetic dollar backed by gold, the company announced Monday.
The token was created on the company’s new Alloy by Tether platform and will trade as USDT via smart contracts on the Ethereum Mainnet blockchain, where users will be able to mint it through over-collateralization by depositing another Tether token that tracks the value of the gold.
The new offering highlights Tether’s ambitions to expand beyond its stablecoin USDT, a token with a market capitalization of $112.5 billion that tracks the value of the US dollar and is backed by reserves of US Treasuries and other securities and investments.
Alloy by Tether was developed by Moon Gold and Moon Gold El Salvador, both members of the Tether group. According to the company, Alloy by Tether is designed to be an open platform that will enable the creation of other tied assets, potentially including yield-generating products.
“Alloy by Tether introduces a new category of digital assets known as captive assets, designed to track the price of reference assets through stabilization strategies such as overcollateralization with liquid assets and secondary market liquidity pools,” the company wrote in a press release.
According to the company, Tether Gold has a market capitalization of approximately $573 million and is backed by physical gold stored in Switzerland.
The new aUSDT currency is aimed at users who want 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 raising liquidity with its USDT stablecoin in the current high interest rate environment. In the first quarter, Tether said it posted a profit of $4.5 billion, according to its published filing.
The quality of the assets backing stablecoins like USDT has come under intense scrutiny in recent years, as regulators are increasingly concerned about the liquidity of the reserves that back them and their ability to withstand mass redemption requests as they are under market pressure.
In 2021, Tether, which is based in the British Virgin Islands, reached a settlement with New York’s attorney general – without admitting any wrongdoing – over allegations that it lied about its reserves and hid losses.
That same year he reached a similar settlement with the Commodity Futures Trading Commission, without admitting or denying the CFTC’s allegations.
However, in recent years Tether’s USDT value has been able to track the dollar one-for-one without major decouplings.