Tether (USDT) is the most popular name in the cryptocurrency ecosystem when it comes to stablecoins. Earlier today, it was noticed that Tether Ltd, the company that issues the USDT cryptocurrency, has destroyed 500 Million USDT cryptocurrencies. This is a rather strange move from the company and a statement has since been issued about why it was done.
Data from the past 24 hours reveals what exactly happened with Tether. It appears that the company transferred 500 Million USDT from Tether’s treasury address to the official USDT issuing address. However, immediately after the transaction was confirmed, the issuing address revoked these tokens, which lead to these tokens being permanently removed from the existing circulation - and ultimately being destroyed.
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One of the most interesting things about this movement from the firm is the timing of it all. Earlier in October, it was noticed that Tether’s market cap was facing a strong downtrend. Close to 800 Million USDT had been redeemed over the course of the month, and Tether’s market cap had fallen below the $2 Billion mark.
However, while all of this was happening, close to a billion USDT was being held in the treasury - but wasn’t really out in circulation. Following this ‘destruction’ of 500 Million USDT, Tether now holds 467 Million USDT in the treasury. There have been various speculations about why this happened. Rumours in the cryptocurrency markets currently indicate that Bitfinex went ahead and sold 100,000 BTC to fund this redemption. Bitfinex has denied that and shot down these rumours.
Tether published the following statements confirming this destruction of tokens:
“Over the course of the past week, Tether has redeemed a significant amount of USDT from the circulating supply of tokens. In line with this, Tether will destroy 500m USDT from the Tether treasury wallet and will leave the remaining USDT (approx 466m) in the wallet as a preparatory measures for future USDT issuances.
Conceptually, the Tether issuance and redemption process is outlined in the Tether whitepaper, with issuances and redemptions visible through observing the Tether treasury balance on the OMNI blockchain.”
The timing of this move is also quite interesting as this announcement comes just one day after Circle’s stablecoin USDC was announced to get listed on the Coinbase cryptocurrency exchange. This poses a serious challenge to the dominance of Tether, which had been enjoying a major share in the markets when it came to stablecoins. In addition to this, Gemini exchange, which is owned by the Winklevoss twins also launched the Gemini Dollar (GUSD) stablecoin.
While Tether continues to be among the top 10 cryptocurrencies, the emergence of new players in the markets such as USDC, TUSD, PAX and GUSD brings forward a major challenge to its free run in the markets. It will be interesting to see what the future holds for USDT. Stay tuned with us here at Cryptoground for all the latest updates and news stories from the world of cryptocurrencies and the blockchain technology!