Tether, the issuer of USDT, a popular stablecoin, launched a new token connected to the Mexican peso on 26th May. The token will increase the company’s visibility and impact in Latin America. Tether’s decision to introduce MXNT appears to be a positive move.
A Tether news release cites research from the Triple-A agency. 40% of Mexican businesses want to use blockchain technology and cryptos. When you go deeper into the numbers, barely 2.5% of Mexico’s population holds crypto.
The potential for Mexico to become a Latin American crypto powerhouse is undeniable. With currency-linked stablecoins, Mexico can speed up and reduce the cost of remittances. But, it will amount to hundreds of billions of dollars annually.
With crypto’s growing use in Latin America, Paolo Ardoyno said MXNT could reduce instability. But that will be for people wishing to convert their assets from fiat to digital currencies. He commented on the occasion. It’s a win-win situation for both parties.
MXNT joins the stablecoins linked to fiat currencies like the Tether on the Tether shop. Three more tokens are tied to fiat currencies USDT, CNHT, and EURT. Although this range is impressive, Tether’s issues placed a pall on the company’s good news.
So, investors panicked at the beginning of May, and USDT fell from its 1:1 dollar peg. For a while, it traded at a reduced rate to the market. Tether’s reputation was still tarnished, despite the disclosure of an audit. The audit confirmed the company’s reserves were enough.
USDT Lost $7B
When USDT fell below the $1 mark last week, several investors rushed to remove $7B from Tether. But, that was amid renewed concerns about the most popular stablecoin’s stability. The price fell to $0.95 after the UST algorithmic stablecoin supported by the Terra chain stopped.
Upon investigation, they discovered that they used the short-term commercial documents as collateral. It’ll be collateral for Tether as part of a payment with the NYC attorney general. The loss of the UST peg and the withdrawal of $7B from Tether was a cause for concern.
There are concerns that USDT will not be completely backed again. Stablecoins like Tether support a combination of unnamed Treasury bills. The commercial paper currently totals about $34.5B and $24.2B. Tether made many requests for a full audit of USDT reserves. They informed CNBC in 2021 that they would complete one within a few months. But, it is incomplete.