Tether, the company behind the world’s largest stablecoin, USDT, has recently created an additional one billion USDT tokens. This action, described as “authorized but not issued” by CEO Paolo Ardoino, signifies that these tokens are prepared but not yet active in the market.
On December 25, the blockchain monitoring service Whale Alert reported on X (formerly Twitter) that Tether Treasury had generated one billion USDT. Ardoino clarified in a response on the same platform that this move was an “inventory replenish” on the Ethereum blockchain, explaining that these tokens are set aside for future issuance requests and chain swaps but are not yet circulating in the market.
In the realm of traditional finance, inventory replenishment involves restocking to meet demand without overstocking. For Tether, it means creating new USDT tokens that are held in reserve, marked as “authorized but not issued.” These tokens do not contribute to USDT’s total market capitalization since they are not in circulation.
As of December 26, 2023, Tether’s Transparency page indicated that $925 million in USDT on Ethereum is in this “authorized but not issued” state.
This recent billion USDT creation mirrors a similar event in September 2023, where Ardoino also emphasized the distinction between authorization and actual issuance, noting that the tokens were reserved for future needs on the Tron network.
However, some observers have raised concerns about the transparency and implications of these large-scale token creations. Critics have questioned the decision-making process behind these actions and speculated about potential impacts on Bitcoin’s price, suggesting that such moves could be aimed at influencing the cryptocurrency market.
Despite these concerns, Tether has seen substantial growth over the past year. Its market capitalization has soared by nearly 38% since January, climbing from $66 billion to $91 billion, as per CoinGecko data. Meanwhile, Bitcoin’s price has experienced fluctuations, trading around $42,760, marking a 2% decrease over the last 24 hours.
In November 2023, Tether attributed its growth to factors including market enthusiasm for a potential spot Bitcoin ETF and its increased involvement in Bitcoin-related activities, such as purchasing Bitcoin for its reserves and initiating Bitcoin mining operations.
As of now, Tether has not provided an official response to inquiries regarding these latest developments.
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