Hong Kong-based cryptocurrency company Tether announced on Monday that it has launched its Chinese yuan-pegged stablecoin dubbed “CNH₮.” The company is expanding its basket of supported currencies in a bid to attract Chinese traders.
Why it matters: Tether has beaten China’s central bank to the punch in launching a yuan-pegged digital currency. The country’s central bank recently ramped up research and development in digital fiat currency which could be ready for launch as early as November.
- The cryptocurrency firm appears to be cashing in on rising demand for digital assets amid China’s economic turmoil and the trade war with the US.
- Some market observers fear that due to China’s hard stance against all cryptocurrencies, a product like CNH₮ will draw more unwanted attention from Chinese regulators.
Bottom line: Tether’s CNH₮ could eliminate the need to use traditional currencies when trading cryptocurrencies like Bitcoin.
Details: The stable-coin is pegged to offshore Chinese yuan (CNH).
- CNH₮ will run on the Ethereum blockchain as an ERC-20 token. According to the announcement, the new stablecoin is a further expansion of the company’s capabilities in “facilitating the digital use of traditional currencies.”
Context: Last month, China’s currency slipped to its lowest levels against the US dollar in over a decade against the backdrop of an escalating trade war. Cryptocurrencies like Tether have been seeing a rise in demand because they are regarded as safe-haven assets in China as its currency weakens, a recent Bloomberg report explained.
- Tether has been grappling with regulators in the US. In China, the company’s US dollar-pegged stablecoin USDT is being used heavily in China by merchants and traders to avoid government regulations and skirt currency controls.
- USD-backed Tether (USDT) is a popular means for Chinese traders to enter and exit the cryptocurrency market off the regulatory radar.
- CNH₮ is the fourth stablecoin issued by Tether, following others pegged to the US dollar, Euro (EURT), and the Japanese yen (JPYT).