Controversial cryptocurrency platform Tether may soon issue a new offshore Chinese yuan-pegged stablecoin dubbed “CNHT,” according to Chinese blockchain media ChainNews.
Why it matters: The move could allow Tether to take advantage of China’s growing appetite for stablecoins and crypto trading.
- USD-backed Tether (USDT) is a popular means for Chinese traders to enter and exit the cryptocurrency market off the regulatory radar.
- Some believe that launching a new yuan-pegged stablecoin could get on the nerves of Chinese financial regulators.
- The country’s central bank has been focusing on the development of its own digital fiat currency in response to Facebook’s high-profile crypto project, Libra.
- In China, the demand for USDT is on the rise, higher than any other countries in the world. According to research by crypto market intelligence firm Diar, Chinese exchanges facilitated 60% of Tether trading globally this year to date.
Details: The plan was revealed on Wednesday by Zhao Dong, a prominent Chinese crypto trader in and shareholder of Tether affiliate crypto exchange Bitfinex.
- Zhao told (in Chinese) ChainNews the yuan-pegged stablecoin will be launched “in the near future” and said his digital asset management platform RenrenBit will be the first company to invest in and back CNHT.
- In another interview (in Chinese) with crypto media outlet BiShiJie.com, Zhao said the yuan-pegged coin will be issued on Omni, ERC20, Liquid, and other networks.
- Aside from fear that Tether’s move might trigger a negative reaction from the Chinese central bank, some doubt that CNHT would see high demand as local Chinese crypto-traders might still prefer to trade the USD-pegged Tether with onshore Chinese yuan, as they have been.
Context: Tether is being used heavily in China to avoid government regulations and skirt restrictions including on the amount of foreign currency individuals can buy or sell per year.
- According to Coindesk, grey-market vendors from China use Tether to transfer funds across the border with Russia. The total volume of USDT purchased by Chinese businesses can reach up to $30 million daily, according to traders.
- CNHT will be the fourth stablecoin issued by Tether after ones pegged to the US dollar, Euro (EURT), and the Japanese yen (JPYT). In May, crypto investment platform eToro launched “CNYX,” a stablecoin backed by onshore Chinse yuan.