Tether, the company behind the eponymous dollar-pegged stablecoin, announced today that it was launching a redesigned platform that would allow for the verification of new customers and direct redemption of the token to fiat.
In an announcement published earlier today, the company explained that it had been unable to foresee the rapid adoption growth of Tether (USDT), which had been largely driven by “the unexpected rush of new cryptocurrency traders over the last year”. This made Tether’s initial model, which enabled redemption of USDT to fiat directly through the company’s proprietary platform, “unsustainable”, so the firm chose to use the platform of cryptocurrency exchange Bitfinex.
“Those wishing to redeem could do so 1:1 via Bitfinex with whom we had a business to business relationship,” Tether said.
With the launch of Tether’s redesigned platform direct redemption of USDT to fiat is once again available to customers. According to Tether, this was made possible thanks to “stronger banking as a result of our new relationship with Deltec”, its new banking partner based in the Bahamas. “This update allows the immediate withdrawal of Tether to fiat (1:1), with the ability to acquire coming soon”.
Tether has become subject to harsh criticism this year, which has been prompted by uncertainty over its banking partners and the lack of a full audit to prove that all of its tokens are 100% backed by US dollars. This has helped other stable coins, such as the Coinbase-backed USD Coin to rise to prominence. Tether said today, that while it had managed to maintain its stablecoin dominance in the face of new competition, it “differentiated, with heavy adoption amongst professional investors”.
The new service is aimed at professional investors, which is reflected by the high minimal requirements for issuance and redemption - $100,000 and $100,000 USDT, respectively. The service also charges significant fees.