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Tether has expanded its stablecoin offering with a coin that will most likely cause controversy in the crypto community.
The firm announced the launch of a stablecoin named the CNHT, and it said that this coin will be pegged one-to-one with the offshore Chinese yuan.
The coin launched by Tether is similar to the USDT which is pegged directly to the US dollar. Tether said that the CNHT will be issued as an ERC20 token on the Ethereum blockchain.
Beating the Chinese central bank to launch of Yuan digital currency
The announcement of the CNHT comes at a time when China’s central bank is in the process of developing a digital version of the yuan.
Tether’s move is guaranteed to create a great deal of controversy and cause a ripple effect that may affect the crypto industry in China.
The Chinese government is known for being unfriendly towards cryptocurrencies and having Tether beat them to the launch of a digital version of the yuan may push regulators in the country to tighten restrictions on the crypto industry.
According to Tether, the CNHT is meant to do away with the need for traders to exchange their yuan every time they want to engage in crypto trading. Instead, one will just use their CNHT to purchase Bitcoin or any other cryptocurrencies that they want to buy.
Many investors are considering Bitcoin as a safe haven asset as the US-China trade war escalates and its effects are felt across money markets.
Tether has stepped in to offer these investors a digital currency pegged one-to-one with the yuan and create smooth liquidity for Bitcoin trading.
Attached to Tether’s announcement is a smart contract address which reflects the number of CNHT that the company plans on distributing.
No exchanges have announced support for CNHT yet, but it is expected to be listed on the top exchanges soon. Crypto traders will be able to buy Tether online and engage in seamless trade with Bitcoin.
Tether has been surrounded by controversy regarding its USDT stablecoin and it’s pegging to the dollar.
In early 2018, a complaint against Tether was issued by the New York Attorney General regarding the company’s proximity to BitMex, and its role in covering up BitMex’s loss of $850 million.
The exchange is alleged to have borrowed the lost funds from Tether’s dollar reserves, which would be in contravention of the city’s regulations.
During the course of the matter, Tether’s lawyer said that the company misbalanced their USDT peg before handing over funds to BitMex. The funds sent to BitMex made the USDT $0.26 less than it was supposed to be.
This means that Tether’s position was in violation of their claims that the USDT is pegged one-to-one to the US dollar.
Tether created more controversy after they said that there is no contractual agreement or any legal position that guarantees the USDT will be redeemed for US dollars. Investors still seem interested in the stablecoin as the demand for it has only risen.