Tether Holdings announced its plans to launch an offshore stablecoin in China which is to be backed by renminbi (Yuan). It is to be dubbed CNHT.
After Bitfinex enabled trading of Tether on their platform in 2015, Tether’s USDT made a massive impact on the crypto economy of China. To date, it has obtained a market share of over $4 billion, and USDT has become the most dominant stablecoin which makes up the majority of the cryptocurrency deals.
This week, Tether accounted for more than 75% of all Bitcoin trades, 49% of Global Ethereum (ETH) swaps, 40% of XRP deals, and 57% of all Bitcoin Cash (BCH) trades. When the project commenced in November 2014, in beta, the company stated that their flagship tokens would eventually embody three currencies:
UStether (US+) for United States dollars, Eurotether (EU+) for Euros and Yentether (JP+) for Japanese yen.
A report by the cryptocurrency journalist, Anna Baydakova stated that the Chinese importers in Russia were purchasing, at least $30 million of Tethers, in a single day. And USDT had become the ruler of all the crypto trades happening between the borders of China and Russia.
Initially, Bitcoins was used by the importers in most of their deals, but since 2018, they switched to the Tether stablecoin. The report stated:
According to several Moscow OTC traders, it has at least one real-world use case – as the go-to remittance service for local Chinese importers.
After Baydakova’s report, the prominent Bitfinex investor Zhao Dong commented on the possibility of an offshore Tether product called CNHT. He explained the plan on the social media platform Wechat and the Chinese messenger. Zhao also claimed that after the launch of CNHT, his over-the-counter business Renrenbit would also support its trade.
He published on WeChat:
Personally, I think the offshore Yuan stablecoin could boost the circulation of the offshore renminbi and internationalize it. Regulators may be happy to see it proceed and succeed.
He also revealed in an interview that Tether could also release stablecoins subsidized via bulks of crude oil, gold or rubber.
The announcement was tailed by the migration of Tethers from Omni Layer (formerly Mastercoin) to the Ethereum chain. In the last week, ERC20-based Tether transactions dethroned their Omni equivalent, and old users had to pay $260,000 in Ethereum gas to push the ERC20 versions. The same week 100,000 ERC20 Tether transactions were made while only 39,000 Omni Tether transactions, occurred.
In August 2016, Tether Holdings were issuing euro-based Tethers through Omni, EUR but later they moved the EURT project to the Ethereum chain in January 2018. Just like USDT’s current departure from Omni to Ethereum.
All these were happening, while the company was under an investigation by the New York Attorney General (NYAG). Tether and Bitfinex were accused of losing millions of dollars worth of customer and corporate funds. Ifinex, the parent company of the firms denied the allegations and attempted to get the case settled on the grounds of jurisdictional overreach, but lost.
A senior official at the People’s Bank of China (PBOC) published that the country’s state-backed cryptocurrency was “close to being out.” The PBOC coins could be a problem for Tether if suddenly; the Chinese government decides to ban fiat-backed tethers. They may meet the same fate as Bitcoins met in 2017.