Tether moves to El Salvador

The cryptocurrency platform Tether is planning to relocate its headquarters to El Salvador. The operators of the world's largest stablecoin want to capitalize on the Central American country's efforts to become a center for crypto trading with this move writes the news agency Reuters.

Tether CEO Paolo Ardoino confirmed the move plans to Reuters after Tether was recently granted a digital asset provider license in El Salvador. Ardoino also stated that he and other company executives would relocate to El Salvador to live. So far, the company is registered in the British Virgin Islands. “This move to El Salvador will be the first time we will also have a physical headquarters,” Ardoino said. However, some of the more than 100 employees will continue to work remotely.

The world's largest stablecoin

Tether was created in 2014 as a bridge between the traditional banking system and the emerging crypto market. A Tether (USDT) is always worth one US dollar (USD) and is backed by cash, bonds, corporate bonds or other assets denominated in US dollars. However, Tether does not fully disclose where and in what form the reserves are held. According to Reuters, the company stated that the vast majority of its stablecoins are backed by traditional currency reserves held at investment firm Cantor Fitzgerald. Its CEO Howard Lutnick is Donald Trump's nominee to be the next US Secretary of Commerce. Tether is the third largest cryptocurrency after Bitcoin and Ether and the world's largest stablecoin.

Occasionally, Tether appears in connection with criminal investigations. In November 2023 , following a joint investigation with the US Department of Justice and the crypto exchange OKX, Tether froze USD 225 million worth of tokens linked to online fraud in Southeast Asia. In the summer of 2021, investigations into Tether itself caused upheaval in the cryptocurrency market. Since then, regulators in the US and EU have tightened control of the crypto industry. The booming market for stablecoins is worrying the regulatory authorities. They fear that the growing stablecoin reserves expose the financial system in general to greater risks.

Crypto paradise, El Salvador

Ardoino did not comment to Reuters on whether the relocation of Tether's headquarters to El Salvador is related to regulatory efforts in the US and elsewhere. President Nayib Bukele is trying to turn El Salvador into a hub for trading digital currencies. In September 2021, El Salvador became the first country in the world to introduce Bitcoin as an official means of payment. The government hopes that this will improve access to payment systems for the poor and facilitate money transfers from Salvadorans abroad. Critics see risks to monetary stability due to the cryptocurrency's large fluctuations in value. There is also a lack of transparency and the risk of money laundering.

Overall, it was a rather bumpy start to the Bitcoin era. There were repeated protests among the population against President Bukele and his Bitcoin Act. At the end of January 2022, the International Monetary Fund (IMF) called on El Salvador to abandon bitcoin as a means of payment. The use of bitcoins was associated with too many risks – for financial stability, financial integrity and consumer protection, as well as the associated contingent tax liabilities. Meanwhile, the fall in the value of Bitcoin exacerbated the financial crisis in El Salvador.

The wind has since changed. However, the election of Donald Trump as the next US president triggered a Bitcoin rally to record highs. Trump has promised to introduce a friendlier regulatory environment for cryptocurrencies and plans to create a strategic US Bitcoin reserve.

(akn)