The pressure of compliance and competition has increased sharply, and Tether's self-help is in progress

Chain catcher (ID: iqklbs)

, Author: Gong Quanyu, reproduced by Odaily with authorization.

Faced with the sharply increasing pressure of compliance and competition, Tether’s ills of rough growth in the past few years have exploded sharply. Under the allegations of New York prosecutors, it has posed a serious threat to its own destiny. For this reason, Tether has launched various self-rescue measures, especially the launch of CNHT and other diversified What kind of effect can these measures achieve? Where will Tether go?

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

In fact, this is not the first time that the cryptocurrency market has anchored the cryptocurrency of the offshore yuan. Just in August and September last year, a company called Galaxy Digital Asset Management Co., Ltd. claimed to anchor the offshore RMB stablecoin WIT, with a circulation of 1 billion. Background, etc., quickly disappeared after causing several waves of market exposure.

Tether's re-issue of the offshore RMB-anchored stablecoin is obviously more reliable than the former, but there are still many unknown risks.

The first is the credibility of Tether, the issuer of the stable currency. Previously, Tether issued the stable currency USDT, which had well-known problems such as over-issuance, misappropriation of reserve dollars, and manipulation of currency prices, and has been investigated by the Office of the Attorney General of New York. How these RMB assets anchored by CNHT are stored and how to ensure that they are not misappropriated, the relevant details are unknown 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 are not allowed to operate two-way exchange business between RMB and cryptocurrencies, while offshore RMB is operated by overseas financial institutions for overseas residents, and can be freely traded in the foreign exchange market, and is hardly affected by China's monetary policy.

But 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 always maintained a high pressure on the application of RMB in cryptocurrency. If an institution with a high degree of connection with China uses CNHT, it may still attract relevant supervision. departmental penalties.

In fact, shortly after the news of Tether’s launch of the stablecoin CNHT appeared, Du Jun stated in his circle of friends that he and node capital holding companies would resist any platform that listed CNHT trading pairs, because it would increase the system for domestic currency citizens and enterprises. sexual risk.

Xiao Lei, a financial writer, specifically pointed out that investors will face greater systemic risks when using CNHT, because it does not have the same regulatory checks and balances as in the United States, so it is easier for Tether to embezzle user funds under the RMB framework, and then after the United States is punished, Use the funds of Chinese users to pay the fines in the United States.

"Currently, this method has a big credit problem, and more trusted third parties are needed to participate in the issuance, otherwise it is a typical loophole in the law, and it is basically impossible for investors to be protected." Xiao Lei said.

If the aforementioned logic is also recognized by mainstream exchanges with a domestic background, this means that once CNHT was born, it will face the dilemma of not being able to be used by most of its target audience. As for overseas users, there is no sufficient reason to use RMB stablecoins. Therefore, the development space of CNHT will be extremely limited, unless there are major changes in domestic regulatory policies.

But there are also industry insiders who hold a positive view. Liu Changyong, Ph.D. in Economics from Peking University and founder of Zhimi University, posted on Weibo that for the Chinese monetary authorities, CNHT anchors the renminbi and mortgages the renminbi. Therefore, it is actually an extension of the supply of renminbi and a concrete realization of the internationalization of the renminbi.

At the same time, for the cryptocurrency market, Liu Changyong believes that CNHT has increased the liquidity of the market, made up for the gap in the RMB stable currency, and increased the RMB denomination and value storage tools for cryptocurrency transactions, which will significantly increase market activity and alleviate Market shocks from the U.S. dollar and U.S. dollar stablecoins increase the robustness of the cryptocurrency market.

From the perspective of specific transaction data, the market’s acceptance of the stable currency CNHT is still very low. Only Tether’s affiliated exchange Bitfinex has launched CNHT trading pairs. According to the statistics of Chain Catcher at 20:00 on September 12, the trading volume of CNHT in the last 24 hours Compared with other mainstream stablecoins, the transaction volume is negligible.

According to public information, in addition to stablecoins anchored to the RMB, Tether is actually promoting stablecoins anchored to the euro and Japanese yen, and is also considering issuing stablecoins anchored to commodities, such as gold, crude oil, and rubber. It is not difficult to see from these measures that Tether is trying its best to get rid of its dependence on the US dollar stablecoin USDT, and at the same time become a comprehensive stablecoin company with diversified businesses.

In fact, since the beginning of the year, Tether and its affiliated company, Bitfinex, have come under tremendous pressure from U.S. regulators. In April of this year, the New York State Attorney General's Office (NYAG) brought USDT's issuer Tether and its parent companies iFinex Inc and Bitfinex to court, accusing the two of four major violations including operating without a license, and further pointed out that Tether was involved in Misappropriating USD 900 million in USDT reserves to help Bitfinex make up for the shortfall.

At the end of July this year, New York prosecutors held a hearing. The USDT issuer Bitfinex and its parent company had a heated debate with the New York prosecutors mainly on whether USDT was a security and whether Bitfinex provided trading services for residents of New York State. However, this hearing did not draw any conclusions and judgments, and it was decided to postpone it for 90 days to wait for further investigation by the regulatory authorities, that is, the next hearing will be held as early as the end of October.

From the perspective of Tether and Bitfinex, this is unfair oppression by the United States. Just a few days before the hearing, Giancarlo, the founder and CFO of Bitfinex and one of the founders 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 share of the interests Soup, but there is no way to take Bitfinex.

"The U.S. government just wants to compete for the dominance of digital currency. The USDT circulation backed by the U.S. dollar is beneficial to the United States, but if the digital currency market is really dominated by the United States, it will be a disaster and will destroy the entire digital currency system. In the future In five years, no one will be willing to cooperate with the United States, and eventually the United States will build its own walls to isolate itself." Giancarlo said.

Zhao Dong, a shareholder of Bitfinex, also posted on Weibo that NYAG will definitely continue to keep an eye on Bitfinex and Tether. The US wants to kill them. It is not a matter of right or wrong but a political issue, just like the US wants to kill Huawei. "Currently, the issuance of USDT has accounted for 80% of the market, up to 4 billion US dollars. The Tether team believes that occupying such a high proportion of a currency is relatively risky." Zhao Dong said.

At the same time, Giancarlo also began to express his favor to the Chinese government, "I hope that China can gradually open up its policy of opening up to digital currencies. If China issues a digital stable currency based on RMB, I am willing to do my best to help. After all, I am in stable currency and Everyone has rich experience in the field of digital currency. I believe that within the next ten years, China will become the most powerful country.”

Once the New York prosecutors have obtained sufficient evidence in the past few months, and put forward more serious charges in the next hearing and ban the issuance of USDT, Tether will face a severe crisis of survival. Therefore, Tether’s issuance of the RMB-anchored stablecoin CNHT this time, although it is difficult to actually implement it, still means that it has a firm belief in implementing a diversified strategy. This is actually the risk prevention awareness that any company with huge ambitions should have. .

As mentioned earlier, in addition to the RMB stablecoin, Tether also plans to launch a series of stablecoins anchored to the euro and gold, but the effectiveness of these stablecoins is also questionable.

As we all know, the stablecoin USDT issued by Tether still maintains its leading position in the stablecoin market to a large extent because of its first-mover advantage and user trading habits. The stablecoins such as GUSD and USDC that have appeared in the past year have a higher degree of compliance and credibility. It is also difficult for Gao to shake the advantages of USDT.

The core demand of users for stablecoins still lies in convenience. This convenience is reflected in having enough trading pairs and enough exchanges to list the currency to meet the needs of users who use stablecoins to transfer funds on different exchanges. This determines that at most only 2-3 stable coins can be popularized in the cryptocurrency industry.

Even Tether, the issuer of USDT, can hardly change users' trading habits and rules. The newly issued stable currency will not gain more recognition because of USDT's public influence, but will only be criticized by users because of the credibility crisis of the issuer. resist.

Moreover, Tether is also facing an increasingly severe competitive environment. Many mainstream exchanges have also begun to issue stablecoins. Especially in recent months, many exchanges have begun to cooperate with compliant stablecoin issuers, which may soon affect USDT Market share in mainstream exchanges.

In early June, OKEx and OKLink announced cooperation with Prime Trust, a U.S. compliance custodian, to launch USDK, a stablecoin pegged to the U.S. dollar; in mid-July, Huobi announced a partnership with Paxos Trust, a U.S. compliance trust, to resolve The scheme HUSD is upgraded to HUSD Token, a stable currency linked to the US dollar. In early September, Binance announced a partnership with Paxos, a U.S.-based compliant trust company, to launch the U.S. dollar-pegged stablecoin BUSD.