Crypto stablecoin giant Tether introduces new synthetic dollar backed by gold
Tether, the issuer of the largest stablecoin in the cryptocurrency market, has created a new synthetic dollar token called aUSDT that is backed by gold. This new token was launched on Tether's Alloy by Tether platform, which is designed to be an open platform for creating various tethered assets.
Users can mint aUSDT by depositing another Tether token that tracks the value of gold, through an over-collateralization process. The aUSDT token is intended to allow users to make transactions, payments, and remittances with a currency similar to the US dollar without having to sell their gold-backed digital assets.
This move by Tether highlights the company's ambitions to expand beyond its flagship USDT stablecoin, which has a market capitalization of $112.5 billion and is backed by US Treasury bills and other securities. Tether has reported significant financial gains with USDT, earning a profit of $4.5 billion in the first quarter of 2024.
However, Tether's stablecoins have faced increased scrutiny from regulators in recent years, with concerns over the liquidity of the reserves and their ability to withstand mass redemption requests. In 2021, Tether reached settlements with the New York Attorney General and the Commodity Futures Trading Commission over allegations of misrepresenting reserves and concealing losses, without admitting any wrongdoing.
Despite these regulatory challenges, Tether's USDT has maintained its value equivalent to the US dollar without major depegs in recent years.