Tether Debuts New 'Synthetic' Dollar Backed by Tokenized Gold in Tokenization Push

Users can mint new tokens using the company's new Alloy platform, which will be part of Tether's upcoming tokenization venture, CEO Paolo Ardoino said.

AccessTimeIconJun 17, 2024 at 2:18 p.m. UTC
Updated Jun 17, 2024 at 2:21 p.m. UTC

Tether, the company behind the $110 billion stablecoin (USDT), debuted Monday a new token minting platform called Alloy on the Ethereum network that lets users create tokens collateralized by Tether's tokenized gold (XAUT).

"Alloy by Tether is an open platform that allows to create collateralized synthetic digital assets and will soon be part of the new Tether digital assets tokenization platform, launching later this year, Paolo Ardoino, CEO of Tether," said in an X post. The platform may potentially offer yield-bearing products in the future, said Tether in a press release.

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  • The first asset available on the platform is aUSDT, whose price is pegged to the U.S. dollar. Investors can mint aUSDT by depositing Tether's XAUT as collateral. XAUT has a $570 million market capitalization and is backed by physical gold stored in Switzerland, according to Tether.

    The aUSDT token is targeted for users who want to use crypto for payments and remittances without selling their gold-backed tokens, the press release explained. The position needs to be overcollateralized, meaning that the amount of new tokens users can mint is maximized at 75% of the collateral value.

    Moon Gold NA, S.A. de C.V., and Moon Gold El Salvador, S.A. de C.V. will handle the asset issuance, which are regulated under El Salvador's National Commission of Digital Assets (CNAD).

    Tether's new offering followed Tether's efforts to expand its services beyond issuing USDT, the largest stablecoin by market value and a backbone of the digital asset market. The company recently invested in bitcoin (BTC) mining, payment processing and artificial intelligence (AI) via cloud computing.

    Ardoino also outlined plans in April to launch a tokenization platform that would facilitate the creation of digital versions of a range of assets including bonds, stocks, funds and loyalty reward points.

    Edited by Stephen Alpher.

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    Krisztian  Sandor

    Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.