Crypto trading platform Bitfinex’s top investor Zhao Dong has reportedly announced that its sister concern Tether Holdings will soon launch another model of the USDT stablecoin, which will be backed by commodities like gold, rubber and crude oil. The intention behind launching a currency of this kind is to eliminate the risk that comes with letting huge amounts of fiat money stay deposited in banks. While a move like this from Tether is not a surprise, how it actually shapes up remains to be seen.
According to reports, Dong also emphasized that Tether, one of the original stablecoins, is backed by USD to a minimum extent of 83.75%, and not 72%, as claimed by some reports. Earlier projected as backed to the USD 1:1, Tether later turned out not to be so, which stirred up a lot of controversy.
In Dong’s words,
“Tether is fully backed by reserves, out of 4 billion existing USDT about 3.35 billion are now in securities, and 650 million are being lent to Bitfinex. Bitfinex has been raising 1 billion with it’s LEO token IEO and could easily pay back Tether any time (as a matter of fact it already paid 100 million last month).”
The New York Attorney General filed a suit against Bitfinex and Tether in April stating that Bitfinex lost $850 million that was needed for user redemption, and covered the loss by secretly taking funds from Tether. They have however, asserted that these are false claims.
The crypto economy has witnessed the massive rise of Tether as well as the controversies surrounding it. The rising demand from China has also sparked the plans for CNHT, a digital Yuan. The Chinese Yuan and bulk commodities backed stablecoins could be the new way to go for Tether now.