Stablecoin Tether crosses US$100 billion tokens in circulation

THE number of US dollar-pegged stablecoins issued by Tether has crossed US$100 billion, the crypto company said on its website on Monday (Mar 4).

Tether issues a stablecoin which is designed to maintain a constant value of US$1. It is widely used as a way of moving money in cryptocurrency without being exposed to price swings in other cryptocurrencies such as Bitcoin and Ether.

The company says it maintains its US dollar peg by holding US dollar-based reserves which match the volume of cryptocurrencies it has created.

While the US dollar-pegged tether token is pegged at US$1, it has in recent days traded as high as US$1.0020, reflecting increased demand from investors betting on a surging bitcoin and using tether as a means of exchanging fiat currencies for crypto ones.

“Traders were willing to pay a premium on tether in order to get their orders through,” said Justin D’Anethan, head of Asia-Pacific business development at digital assets market maker Keyrock.

“Ironically, tether has always been FUDed (plagued by anxiety about their legitimacy) as they resisted disclosing their reserves and balance sheet for years,” D’Anethan said.

“Nonetheless, they’ve been around and stood the test of many volatility events, from 2017 up to now, and an overwhelming majority of cryptocurrency pairs are denominated in USDT which explains the premium in times of massive bull runs and enthusiasm for the crypto space.”

Around US$124 billion worth of tether had changed hands over the past 24 hours, CoinMarketCap data showed.

US regulators have warned banks that stablecoin reserves could be subject to rapid outflows, for example, if holders rushed to exchange such tokens back into traditional currency.

Tether agreed to provide quarterly reports on its reserves for two years, as part of a 2021 settlement with the New York Attorney General’s office.

At the end of 2023, Tether’s reserves held US$63 billion of US Treasuries, as well as US$3.5 billion of precious metals, US$2.8 billion of bitcoin, US$3.8 billion of “other investments” and US$4.8 billion of “secured loans”, its latest report says. REUTERS