In a new interview with Bloomberg, Paolo Ardoino says the firm could have chosen Bitcoin to back aUSDT but BTC's tendency to go through wild price swings made gold a more preferable option.
Stablecoin giant Tether (USDT) has announced the launch of a new synthetic dollar (USD) product backed by gold.
According to Tether, the synthetic USD is part of its new Alloy product line, which aims to track the price of reference assets through over-collateralization with liquid assets and secondary market liquidity pools.
The stablecoin issuer says that the synthetic aUSDT is backed by gold rather than Bitcoin (BTC) because the precious metal is more stable in price than the crypto king.
In a new interview with Bloomberg, Tether CTO Paolo Ardoino says that the firm could have chosen Bitcoin to back aUSDT, but BTC’s tendency to go through wild price swings made gold a more preferable option.
“Until 1971, the US dollar was backed by gold and we often hear interest from our customers to have optionality…
[So] we also see the opportunity to provide an [option] for others that want to see a more transparent backing of a synthetic dollar and gold is probably the best asset to make that happen because it’s much less volatile than Bitcoin. We could have done Bitcoin but gold is probably a better choice for the short term.”
Earlier this year, Tether announced that it would be launching aUSDT, which is described as a digital asset over-collateralized by Tether Gold (XAUT), a gold-pegged stablecoin. Each XAUT coin represents exposure to physical gold secured in vaults in Switzerland.
The launch of aUSDT comes amid increasing demand for synthetic assets, which are designed to provide investors with exposure to the performance of an underlying asset without having to directly own the asset.
Synthetic assets are typically created by a financial institution and are backed by a pool of assets, such as stocks, bonds, commodities or fiat currencies. They can be traded on exchanges like other cryptocurrencies.
However, synthetic assets are often more complex than standard cryptocurrencies and may carry additional risks, such as counterparty risk.
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