Tether is looking into launching a version of a digital currency backed by a basket of commodities which would include gold, crude oil, and rubber, according to Zhao Dong, an investor of Bitfinex.
Launched in 2014, Tether is the leading fiat-pegged digital currency in the market with a market cap of over $4 billion. However the USDT issuer has been subject to a lot of controversy related to the reserves backing the stablecoin.
Reports suggest that Tether is considering this move of a commodity digital stablecoin in order to minimize the risks associated with fiat storage at traditional banks. As revealed in a lawsuit, Bitfinex had transferred around $850 million to payment processor Crypto Capital, which had been frozen by authorities, leaving a gap in Bitfinex’s books.
The stablecoin issuer, Tether, made headlines after granting a $700 million loan to its sister company Bitfinex, which was brought to the public by the New York Attorney General’s office earlier this year. The exchange hasn’t retrieved the money yet, although its representatives are firmly optimistic.
The company has been under constant pressure with several allegations of not maintaining enough reserves to back the USD-pegged stablecoin. Dong rebuffed all allegations stating:
“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.”
“Even if you don’t calculate this 650 million as reserves the total amount backed by USD is 83.75% (3,350/4000) and not 72 percent as fake news are reporting.”
In addition to the commodity-backed currency, the company is planning to release a stablecoin that is pegged to the Chinese renminbi. Dubbed CNHT, the new stablecoin’s reserve will be held in a bank in Belgium and is set to be launched quite soon, according to Dong. While details are still lacking, Dong explains that CNHT won’t interfere with China’s Central Bank capital control policy:
“CNHT will not interfere with PBOC [People’s Bank of China} capital control policy because CNH is different than CNY, as it’s already an offshore product. On the contrary CNHT will help China to expand the adoption of CNH for international settlements.”
Tether’s intention to issue two new stablecoins comes while the parent company, iFinex Inc., remains under investigation by the New York Attorney General (NYAG) for fraudulently covering up the $850 million loss.