Compliance and competitive pressures soared, Tether self-rescue

In the face of the surge in compliance and competitive pressures, Tether's ill-heavy ills have exploded in the past few years, posing a serious threat to its own destiny under the accusations of the New York prosecutors. For this reason, Tether launched various self-rescue measures, especially the launch of CNHT and other diversification. How to achieve the stability of the currency strategy, then what can be achieved? Where will Tether go?

On September 9, the stable currency company, USDT issuer Tether, announced the launch of a new stable currency CNHT linked to the offshore RMB, with an anchor ratio of 1:1. On the second day, Thther officially issued 20 million VNHTs in the form of ERC20 tokens in the Ethereum network. At the same time, the affiliated company Bitfinex opened three trading pairs BTC/CNHT, USDT/CNHT and CNH/CNHT.

In fact, this is not the first time that the cryptocurrency market anchors the cryptocurrency of offshore renminbi. Just in August and September last year, a company called Galaxy Digital Asset Management Co., Ltd. claimed to anchor the offshore renminbi, the stable currency WIT, with a circulation of 1 billion, but its issuers have multiple doubts, including the currency issue, fiction The background, etc., disappeared quickly after causing several waves of market exposure.

This time, Tether reissued the stable currency anchoring the offshore renminbi, which is obviously more reliable than the former, but there are still many unknown risks.

The first is the credibility issue of the stable currency issuer Tether. Before Tether issued the stable currency USDT, there were well-known problems such as over-issuance, misappropriation of the reserve dollar, manipulation of the currency price, etc., and it has been investigated by the Office of the Attorney General of New York. The details of how these RMB assets anchored by CNHT are stored and how they are not misappropriated are not known to the public.

Furthermore, CNHT will also face possible policy risks. As we all know, the central bank has long stipulated that various financial institutions should not operate the two-way exchange business of RMB and cryptocurrency , while the offshore renminbi is operated by overseas financial institutions for overseas residents and can be freely traded in the foreign exchange market, which is almost unaffected by Chinese monetary policy .

However, this does not mean that there is no risk for exchanges and investors to use CNHT. After all, the People's Bank of China has been maintaining a high pressure on the application of renminbi in cryptocurrency. If CNT is used by institutions with high correlation with China, it may still lead to relevant supervision. Departmental punishment .

In fact, shortly after the news of Tether launching the stable currency CNHT, Du Jun said in his circle of friends that he and the node capital holding company will resist any platform for CNHT trading on the line, because this adds a system to domestic currency and enterprises. Sexual risk .

Financial writer Xiao Lei specifically pointed out that the system risk faced by investors using CNHT will be greater because it does not have the same regulatory checks and balances as the United States. Then Tether is more likely to use user funds under the renminbi framework, and then wait for the US to be punished. Pay the US fine with the funds of Chinese users.

" At present, there are a lot of credit problems in this way, and more trusted third parties are needed to participate in the issuance. Otherwise, it is a typical loophole in the law, and investors are basically impossible to protect ." Xiao Lei said.

If the aforementioned logic is also recognized by mainstream traders in the domestic background, this means that CNHT will face a dilemma that cannot be used by most of its target audiences as soon as it is born. As for overseas users, there is no sufficient reason to use RMB stable currency. Therefore, the development space of CNHT will be extremely limited unless there is a big change in domestic regulatory policies.

But there are also industry people who hold a positive view. Liu Chang, a doctor of economics at Peking University and founder of Zhimi University, wrote on Weibo that for the Chinese monetary authorities, CNHT anchors the renminbi and mortgages the renminbi, so it is actually an extension of the renminbi supply and a concrete realization of the renminbi internationalization.

At the same time, for the cryptocurrency market, Liu Chang believes that CNHT has increased the liquidity of the market, made up for the gap of RMB stable currency, and increased the renminbi pricing and stored value tools of cryptocurrency trading, which will significantly increase market activity and reduce The market shock from the US dollar and the US dollar stabilized the currency to improve the robustness of the cryptocurrency market .

From the specific transaction data, the market's acceptance of the stable currency CNHT is still very low. Only the Tether-linked exchange Bitfinex has launched the CNHT trading pair. According to the chain catcher at 20 o'clock on September 12, CNHT's recent 24-hour trading volume At $227,000, trading volume relative to other mainstream stable currencies is negligible.

According to public information, in addition to anchoring the stable currency of the renminbi, Tether is still pushing for the stabilization of the euro and the yen, while also considering issuing stable coins that anchor large commodities, such as gold, crude oil and rubber. It is not difficult to see from these measures that Tether is trying to get rid of its dependence on the USD stabilized currency USDT and become a comprehensive stable currency company with diversified business .

In fact, from the beginning of the year, Tether and its affiliate Bitfinex suffered tremendous pressure from US regulators. In April of this year, the New York State Attorney General’s Office (NYAG) sued the USDT issuer Tether and its parent company, iFinex Inc and Bitfinex, for four major violations, including the alleged existence of unlicensed operations, and further pointed out that Tether was suspected of The $900 million USDT reserve was used to help Bitfinex make up for the deficit.

At the end of July this year, the New York prosecutors held a hearing. The USDT issuer Bitfinex and its parent company and the New York prosecutors held a heated debate on whether USDT is a security and whether Bitfinex is providing trading services to New Yorkers. However, this hearing did not draw any conclusions and judgments, and decided to postpone the 90-day waiting for further investigation by the regulatory authorities, that is, the next hearing will be held at the end of October.

In the case of Tether and Bitfinex, this is an unfair oppression in the United States. Just a few days before the hearing began, Giancarlo, founder and CFO of Bitfinex and co-founder of Tether, publicly stated in a conversation that Bitfinex was targeted by the US government only because the business was too big and they wanted to share a profit. Oh, but there is no way to take Bitfinex.

"The US government just wants to compete for the dominance of digital currency. The US dollar endorsement of USDT circulation is beneficial to the United States, but if the digital currency market is really dominated by the United States, it will be a disaster that will destroy the entire digital currency system. No one will be willing to cooperate with the United States in five years, and eventually the United States will isolate itself by building its own walls, " Giancarlo said.

Bitfinex shareholder Zhao Dong also sent Weibo to say that NYAG will definitely continue to stare at Bitfinex and Tether. The United States wants to kill them. It is not a right or wrong issue but a political issue, just as the United States wants to kill Huawei. "At present, the circulation of USDT has accounted for 80% of the market, up to 4 billion US dollars. The Tether team believes that such a high proportion in a currency, the risk is relatively large." Zhao Dong said.

At the same time, Giancarlo also began to show the Chinese government, " I hope China can gradually open its policy of opening up digital currency. If China issues a digital stable currency based on the renminbi, I am willing to do my best to help. After all, I am stabilizing the currency and There is a wealth of experience in the digital currency field. I believe that China will become the most powerful country in the next decade ."

Once the New York prosecutors have obtained sufficient evidence in these months and filed more severe allegations at the next hearing and banned the issuance of the USDT, Tether will face a severe crisis of survival. Therefore, this time Tether issued a stable currency CNHT that anchors the renminbi. Although it is difficult to actually land, it still means its firm belief in implementing a diversification strategy. This is actually the risk-defense awareness of any company with great ambitions. .

As mentioned earlier, Tether has plans to launch a series of stable coins, such as the euro and gold, in addition to the stable currency of the renminbi. However, it is doubtful that these stable coins can achieve results.

As we all know, the stable currency USDT issued by Tether still maintains the leading position in the stable currency market. It is largely due to the first-mover advantage and user trading habits . GUSD, USDC and other stable coins appear in the past year, despite the degree of compliance and credibility. High is also difficult to shake the advantages of USDT.

The user's core demand for stable currency is still convenience. This convenience is reflected in having enough trading pairs, and also in having enough exchanges to go online to meet the users' use of stable currency to transfer money on different exchanges. Demand, which determines that only up to 2-3 stable coins can be popularized in the cryptocurrency industry .

Even if the USDT issuer Tether itself, it is difficult to change the user's trading habits and rules, the newly issued stable currency will not be more recognized because of the public influence of the USDT, but only because of the issuer's reputation crisis. Resist .

Moreover, Tether is also facing an increasingly competitive environment, and many major exchanges have begun to issue stable currencies. In particular, in recent months, many exchanges have begun to cooperate with compliance stable issuers, which may soon affect USDT. Market share in mainstream exchanges.

In early June, OKEx and OKLink announced a partnership with US Trust custodian Prime Trust to launch a US dollar-linked stable currency USDK. In mid-July, Firecoin announced a partnership with the US compliance trust Paxos Trust to resolve its original stable currency. The plan HUSD is upgraded to a stable currency HUSD Token linked to the US dollar. In early September, Coin Ann announced a partnership with the US compliance trust Paxos to launch a stable USD BUSD linked to the US dollar.

From the overall trend and the actual situation, the stable currency anchoring the US dollar is still the best choice for the stable currency market. Tether's almost unique weapon can only be USDT, so they need to win the lawsuit at no cost .

Just in early September, Tether also announced a donation of $1 million to victims of Hurricane Dorian in the United States to enhance its image in the US regulatory and public.

In the face of the surge in compliance and competitive pressures, the ills of USDT's rough growth in the past few years have exploded, and under the accusation of the New York prosecutors, it poses a serious threat to its own destiny. Most of the self-rescue measures are only in vain, but fortunately, the user base is almost Unaffected, Tether can only wait for the next New York prosecutor's verdict, which will also be a decision to determine the fate of Tether.

Author: Yu Quan Gong

Source: Chain Catcher

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