Since the announcement that US regulators were looking into Tether and Bitfinex, we have seen a drop in the amount of USDT been printed as the large machine has remained quite silent.
However, in anticipation of the roll-out of the EthFinex platform next month, there has been an uptick in activity in EURT and Eth-based USDT addresses. This is no doubt in order to provide the required liquidity for the platform.
Ethfinex will operate in a similar fashion to the way that Bitfinex does with Tether (USDT). These liquidity tokens will be pegged to the US dollar and will be used on the exchange in order to purchase other securities and assets.
Start up the Printing Press
Although it is still early days in the printing process, two addresses have managed to accumulate a fair amount of tokens. In the case of the ETH-based USDT that will be used on ETHFinex, there is about $60.1m in it.
someone asked me to look at $EURT .balances line up vs obligations (if you believe the transparency page) .Majority held in one address currently. This doesnt seem odd to me as its a new product and only currently used on bitfinex thus far. pic.twitter.com/DCeF5v1n6p
— I am Nomad (@IamNomad) February 8, 2018
These new digital assets are not being spent yet and are just building up in the anticipation of the release of EthFinex trading. They are also not listed as actual tokens on CoinmarketCap as they have not being released on the market for trading.
It is also not entirely clear what these new tokens will be traded against. However, it is likely that a number of ERC20 tokens will be listed given the announcements that Bitfinex has made. We can already expect to see tokens such as Golem being traded on the margin.
USDT Trading Volume Picks Up
Although there has been no more printing of USDT on the Omni layer, there is still a great deal of volume that is being traded for USDT. For example, over the past 24 hours we have seen $3.2bn that has been traded.
The large majority of these volumes have been on OKEx which is then followed in a close second by Binance. The volumes on Bitfinex are only 10% of the volumes of either of these exchanges.
Of course, the fact that the largest cryptocurrency exchange by trading volumes is allowing such a great deal of USDT to be traded is disconcerting for some. There is always the risk that if problems associated with Tether start cropping up again, it could cause issues for the exchange.
More Problems for Tether
It has indeed been quite a tumultuous time for the Tether public image recently. Apart from the request by the US regulators, you also had the news that the Auditor would be pulling out of the Tether audit.
Now, you have also had warnings that have come from the Wiess ratings agency on the shady operations of the Tether team. In one of their regular blog posts they stated that:
The big issue: There’s never been an audit, and the folks behind Tether has been quite shady when asked. They have continuously claimed their tokens are backed 100% by actual dollars, yet they have failed to present any evidence to support this claim
Moreover, they took issue with the fact that the entire supply of Tether is often turned over in a day. It was one of the few cryptocurrencies that saw daily volume that exceeded the total supply of 2.2bn USDT. They stated that investors should be worried about sitting on large amounts of Tether in exchanges.
Implications for EthFinex
Although Bitfinex wants to try and tap the lucrative ERC20 Altcoin trading market, it will be tough for the company to shake the negative associations with Tether. Moreover, one has to wonder which traders are likely to accept liquidity in an ETH based version of Tether.
As the EthFinex platform is currently in Beta testing, it is hard to tell how the printing of these Tethers will impact on market price and supply of Ethereum. There are concerns that it could have an out sized effect in much the same way that USDT had on Bitcoin.
It would be interesting to monitor the movements to and from the identified addresses over the next few months as EthFinex prepares for a launch.
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