Tether: Crypto platform buying more gold than central banks for months
In recent months, Tether has bought dozens of tons of gold, with no central bank in the world keeping pace recently. The reasons are not entirely clear.
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The cryptocurrency platform Tether is apparently the largest holder of gold that is not a central bank. The Financial Times reports this, reports, citing an analysis by the US financial group Jefferies. According to the report, the cryptocurrency platform, now based in El Salvador, bought more gold in both the second and third quarters than any central bank whose data is publicly known. Between April and June, this amounted to 24 tons, and between July and September, it was as much as 26 tons. At least 116 tons of gold belonging to Tether are said to be stored somewhere in an unidentified warehouse in Switzerland. This would be about as much as the central banks of Greece or Hungary own.
Background unclear
Since Tether bought about two percent of the gold sold worldwide in the third quarter – which is said to have corresponded to 12 percent of central bank demand – the platform may even have contributed to the precious metal's price increase. After all, this represents demand that did not exist before. The Financial Times and Jefferies can only speculate about the reasons for the purchases. US laws would prohibit the platform from using the gold as a reserve for its own stablecoin. It is conceivable that Tether is focusing on the tokenization of gold, where ownership rights to physical gold are recorded on a blockchain. This is intended to combine the advantages of gold with those of cryptocurrencies.
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Tether is one of the largest cryptocurrencies, with only Ether and Bitcoin having a higher total value. As a so-called stablecoin, the price of Tether is pegged to another value: one USDT is always worth one US dollar (USD) and is backed by cash, debt securities, corporate bonds, or other assets in US dollars. However, Tether does not fully disclose where and in what form its reserves are held. With Tether Gold, the company already offers a cryptocurrency backed by gold, but currently only needs 16 tons of the precious metal for this. The remaining 100 tons therefore serve another purpose, and almost 50 more tons are expected to be added in the fourth quarter.
(mho)
