Tether, the issuer of the world’s largest stablecoin, USDT, has started printing again after a roughly two-month halt that sparked investors’ concerns and speculation.
Tether has minted at least 2.3 billion USDT since Aug. 1, pushing the token’s market cap to $65 billion, a Tether representative told CoinDesk via email. USDT, which is pegged to U.S. dollars, usually trades at $1.
In June and July, USDT’s market cap stagnated around $62 billion despite small fluctuations. Industry experts attributed the reduced demand to China’s crackdown on crypto, the rise of the competing stablecoin USDC and investor concerns over Tether’s own vulnerability.
Demand for USDT has recently rebounded, according to Tether and industry experts, as crypto market sentiment has turned increasingly positive. The largest cryptocurrency by market cap, bitcoin, has rebounded from its July low of around $29,600, trading at $49,540 as of press time, up 1.8% over the past 24 hours.
“From a supply/demand perspective, as crypto prices go up, more stablecoins and fiat are needed to buy the assets and expand the total market cap of crypto,” Gary Pike, director of sales and trading at crypto services firm B2C2, told CoinDesk.
“We are seeing increased trading activity across venues that support Tether tokens,” a Tether representative said.
It’s possible, however, that the increased demand for USDT recently may not be driven by bitcoin but instead by some altcoins, such as solana (SOL) and terra (LUNA), whose trading volumes surged, according to Noelle Acheson, head of market insights at crypto prime broker Genesis Global Trading. Their main trading pair is USDT. (Genesis is a subsidiary of Digital Currency Group, which also owns CoinDesk.)
The average trading volume of USDT against solana for the first 22 days in August stood at 386.6 million, up from a July average of 123.4 million and a June average of 290.7 million, according to CryptoCompare. The average trading volume of USDT against terra for the first 22 days in August was 320.2 million, up from a July average of 120.5 million and a June average of 98 million.
“BTC’s price may be up, but trading volumes haven’t changed much,” noted Acheson.
Others cited Tether’s increased transparency as another reason for the rebounding demand. In its new attestation published on Aug. 9, Tether provided more details than ever before on the composition of its $62.8 billion of reserves, including its long-questioned reserves of commercial paper (CP) and certificates of deposit (CDs).
Roughly 49 percent of Tether’s $62.8 billion reserves are invested in commercial paper (CP) – typically short-term corporate debt – and certificates of deposit (CDs), out of which roughly 93 percent was rated A-2 and above, 5.5 percent at A-3 and 1.5 percent below A-3 as of June 30.
The latest disclosure “could be the reason for the resumption of printing, alongside renewed investor confidence and demand,” Sean Rooney, head of research at crypto asset manager Valkyrie Investments, wrote to CoinDesk in an email.
But for many, there’s still a lot of fear, uncertainty, and doubt (FUD) surrounding Tether’s reserves.
It will take “multiple years for all of the critics to be convinced,” Pike said.
Fintech CEO: Bukele Buys the Dip Again Signaling He Stills Strongly Believes in Bitcoin
President Nayib Bukele is back at it, noting on Twitter that his country bought 410 Bitcoin for $15 million Friday because “Some guys are selling really cheap.” He continued posting memes on Bitcoin throughout the day Saturday.
“Bukele is in an interesting spot. He’s banked his political career on the rise of Bitcoin, but, beyond that, at every opportunity he embraces the opportunity to buy the dip. Many commentators are talking now about how Bitcoin’s moves are in line with the stock market, so it is fair to think that the recent dip is due to external factors going on across the globe. Bukele certainly thinks so. This kind of public buy is only made when you believe in the long-term potential,” noted Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.
“At the same time, we have politicians taking their paychecks in cryptocurrency, a general preparation for tightening monetary policy, and question marks around the situation brewing in Ukraine. Plus, the Biden Administration is preparing for an executive order focused on cryptocurrency. It is an exciting time to be in the industry,” said Gardner.
“There are lots of people selling right now, but I think, to do that, you have to ignore the institutional money that has embraced digital assets. You have to ignore the technology behind it. You have to believe that CBDCs aren’t going to inspire a broader cross-section of the population to participate in digital assets. Even if things are moving the other way in the short-term, the long-term certainly continues to look bright,” noted Gardner.
Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Modulus has provided its exchange solution to some of the industry’s most profitable digital asset exchanges, including a well-known multi-billion-dollar cryptocurrency exchange. Over the past twenty years, the company has built technology for the world’s most notable institutions, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.
“Regardless of the market price of Bitcoin, there is tremendous wealth tied up in digital assets, and, right now, the question should be whether those assets are being protected in a competent way,” said Gardner.
Fireblocks, which is among the best known custody providers, found itself embroiled in a lawsuit with StakeHound, which alleges the custody company lost roughly $70MM of Ethereum, after the key vanished. As a result, StakeHound could not access over 38,000 ETH.
“Many don’t give custody a second thought, just as they don’t with traditional assets. However, there’s more to custody than meets the eye. We’re talking about safeguarding billions of dollars worth of digital assets. The market will regain momentum. However, we need custody solutions which lean on experience in cybersecurity and exchange security,” opined Gardner.
YouTube To Explore NFT Features For Video Creator
American online video sharing and social media platform YouTube has announced plans to explore Non-Fungible Token (NFT) features to help video creators capitalize on emerging technologies.
According to YouTube Chief Executive Officer, Susan Wojcicki, the introduction of NFT is to enhance the experiences of creators and fans on the platform, she said, “we’re always focused on expanding the YouTube ecosystem to help creators capitalize on emerging technologies, including things like NFTs while continuing to strengthen and enhance the experiences creators and fans have on YouTube.”
NFT, Non-Fungible Token is a unique unit of digital assets such as art, music, videos, and pictures built on a blockchain network. They can be bought and sold on NFT Marketplace.
Aside from YouTube, other social media platform has begun exploring NFT. Twitter now allows users to post NFTs as profile pictures while Meta, the parent company of Facebook and Instagram, is reportedly working on a similar offering where users can display the tokens they own.
Susan Wojcicki in an annual letter informed content creators that the company is considering web3, internet service and mobile apps rebuilt on decentralized blockchain technology as a “source for inspiration”.
According to the CEO, YouTube is continuously exploring ways to serve its creators by adding tools like fan payments and e-commerce thereby creating more means of income generation.
In her letter, Susan Wojcicki affirmed YouTube’s priorities on gaming, shopping, music, and Shorts. The CEO wrote that Shorts has already generated 5 trillion views since its debut in late 2020. However, YouTube did not provide additional details on when and what NFT features would look like.
Stop Using Bitcoin as Legal Tender, IMF Tells El Salvador
The International Monetary Fund (IMF) has urged El Salvador to drop Bitcoin, the world’s most dominant cryptocurrency, as a legal tender over rising concerns about “financial stability, financial integrity, and consumer protection.”
The Executive Board of the Fund said in a report released on Tuesday after it concluded the Article IV consultation with El Salvador.
The report said “Directors agreed on the importance of boosting financial inclusion and noted that digital means of payment—such as the Chivo e-wallet—could play this role.
“However, they emphasized the need for strict regulation and oversight of the new ecosystem of Chivo and Bitcoin. They stressed that there are large risks associated with the use of Bitcoin on financial stability, financial integrity, and consumer protection, as well as the associated fiscal contingent liabilities.
“They urged the authorities to narrow the scope of the Bitcoin law by removing Bitcoin’s legal tender status. Some Directors also expressed concern over the risks associated with issuing Bitcoin-backed bonds.”
The board, however, said while the COVID-19 pandemic disrupted a decade of growth, “El Salvador is rebounding quickly.” The economy contracted by 7.9% in 2020 and is projected to grow by about 10% in 2021 and 3.2% in 2022, the board said.
“Against this backdrop, public debt vulnerabilities emerged,” the board said. “Persistent fiscal deficits and high debt service are leading to large and increasing financing needs.”
El Salvador became the first country to accept bitcoin as legal tender in 2021 despite the uncertainty surrounding the unregulated coin and the entire crypto space. The government gave $30 in free bitcoins to citizens who signed up for its national digital wallet, known as “Chivo,” or “cool” in English, to deepen its adoption.
However, with Bitcoin and other cryptocurrencies falling with the United States plans to raise interest rates in 2022, the country and citizens that invested in the digital currency could be in trouble.
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