In a significant move, Tether, the company behind the largest stablecoin USDT, has created an additional 1 billion USDT tokens. This action, described as an “inventory replenish” by CEO Paolo Ardoino, took place on Christmas Day and has attracted attention from the crypto community.
The blockchain monitoring service Whale Alert first reported this development on the platform X (formerly Twitter) on Dec. 25, announcing that the Tether Treasury had issued these new tokens. Ardoino quickly clarified on the same thread that these tokens were “authorized but not issued,” indicating they were prepared in anticipation of future issuance requests and chain swaps on the Ethereum blockchain.
In the world of finance, “inventory replenishment” typically refers to restocking supplies in response to demand while avoiding excess inventory. For Tether, it means creating new USDT tokens that are held as reserve in the Tether Treasury, not yet released into the market. As such, these tokens do not immediately impact the total market capitalization of USDT.
As of Dec. 26, 2023, Tether’s Transparency page shows that there are $925 million worth of such tokens on Ethereum, awaiting potential future issuance.
This move by Tether is not unprecedented. In September 2023, a similar transaction was flagged by Whale Alert, and Ardoino explained it was also an authorization for future requests and swaps, but on the Tron network.
Despite Ardoino’s explanations, these actions have raised eyebrows among some industry observers, who express concern about the transparency and implications of these “authorized but not issued” transactions. Some skeptics speculate that the minting of new USDT may be used to influence Bitcoin’s price, citing past correlations between Tether’s activities and fluctuations in Bitcoin’s value.
Despite these criticisms, Tether has shown remarkable growth over the past year. Its market capitalization has risen by approximately 38% since January, jumping from $66 billion to $91 billion, as reported by CoinMarketCap. Meanwhile, Bitcoin’s price has seen a slight decrease in the past 24 hours, trading around $43,089.
In November 2023, Tether attributed its growth to factors including market anticipation for the approval of a Bitcoin ETF and its own increased involvement in Bitcoin-related ventures, such as purchasing Bitcoin for its reserves and initiating several Bitcoin mining operations.