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Tether’s $1 Billion Unbacked USDT Defended as “Authorized But Not Issued” 

Published April 18, 2024 9:51 AM
James Morales
Published April 18, 2024 9:51 AM
By James Morales
Verified by Peter Henn

Key Takeaways

  • On Tuesday, April 16, Tether minted $1 billion USDT on Tron without the dollar reserves to back it up.
  • However, CEO Paolo Ardoino reassured people that the unbacked stablecoins are not in circulation.
  • Ardoino said that the amount would go towards inventory for future issuance requests and chain swaps.

Tether raised eyebrows earlier this week. The stablecoin appeared to print $1 billion worth USDT without the reserves to back it up.

Seeking to quell the controversy, CEO Paolo Ardoino assured people the mint was “an authorized but not issued transaction”.

Stablecoins Minted But Not Issued

USDT that is “authorized but not issued” includes tokens created on a blockchain – in this case, TRON – but still in the Treasury ahead of public release.

Tether said : “As these tokens have not been issued, these tokens are not counted as part of the total market capitalization of USDT.” 

For example, at the time of writing, there Tron held $57.8 billion authorized USDT. However, $1 billion of this was unissued, resulting in a net total of $56.8 billion.

The practice is common across the 15 blockchains that host the stablecoin. There are currently $5.4 billion authorized but not issued USDT.

Commenting on the recent issuance, Ardoino explained that “this amount will be used as inventory for next period issuance requests and chain swaps.”

USDT Market Cap at All-Time High

Without the  $5.4 billion worth of unissued tokens, there are currently more than $109 billion USDT in circulation. 

Since the beginning of April, Tether has printed around $5 billion worth of stablecoins. USDT’s market capitalization is now at an all-time high. 

Despite rival Circle making some inroads recently, Tether remains by far the most dominant stablecoin provider, accounting for roughly 74% of the entire global market. 

Tether Still Winning the Stablecoin Race

Looking ahead, Stablecoin regulation in the US could favor Circle’s USDC. Many in the cryptosphere think USDC is a more compliant alternative to USDT. 

However, smaller stablecoins might struggle to gain market share.

Commenting on the Tether and Circle’s dominance, Ledn CEO Mauricio di Bartolomeo said he expects them to further entrench their current lead.

He said: “The only thing that’s going to bring that back in is if the regulator says no.”

“It’s like when you’re in a race and they pull out the Yellow Flag. If the regulator says ‘no, we’re changing the rules,’ everybody has to start from scratch. Absent that, it’s going to be hard for anyone to catch up to USDC and Tether.”

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