Tether has turned its focus to the Bahamas-based Britannia Bank & Trust for processing dollar transfers. This step occurs as the traditional US banks cut ties with the cryptocurrency entities. In the past, Tether has faced questions regarding the reserves that underline its stablecoin, USDT.

Tether Taps Britannia for Offshore Connection

According to the sources who spoke to Bloomberg on condition of anonymity, Tether had instructed clients to send their funds to Britannia’s bank accounts in recent months. However, it remains unclear when the banking relationship began.

Tether, the issuer of the world’s most widely used stablecoin Stablecoin Unlike other cryptocurrencies like Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including Unlike other cryptocurrencies like Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including Read this Term, has long grappled with securing and maintaining access to the traditional financial system. The relationship between the stablecoin sector and traditional banking has often been a tenuous one, with Wells Fargo cutting ties with Tether in 2017.

The mounting pressure from regulatory bodies, including the Securities and Exchange Commission (SEC), has reportedly led to the withdrawal of major and midsize banks from the crypto sector. Additionally, the collapse of prominent financial institutions, Silvergate, Signature, and Silicon Valley Bank, which were considered crypto-friendly, has led banks to rethink their engagement with the crypto companies.

One of the most pressing questions surrounding Tether revolves around the nature and location of its reserves. Tether claims to have USD $86 billion in assets backing its stablecoins, but the alleged lack of transparency about its banking relationships has raised concerns.

Regulatory Pressure Drives Banks Away

The mainstream banking sector’s wariness toward crypto clients has been exacerbated by a string of high-profile collapses, such as the bankruptcy of FTX, combined with a lack of regulatory clarity. According to Reuters, major banking institutions like JP Morgan, Bank of America, and Citigroup are becoming more cautious in engaging with crypto firms, preferring to cater to established players like Coinbase.

About a week ago, Tether released its transparency report, highlighting a combined surplus of USD $3 billion in shareholder capital cushion. These reserves are distributed across 15 different blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Read this Term ecosystems. Additionally, Tether’s total assets of USD $86 billion have exceeded its total liabilities of USD $82 billion.

Tether’s diverse stablecoin offerings, including Tether Gold (XAUT), Tether (EURT), Mexican Peso Tether (MXNT), and Tether Chinese Yuan (CNHT), differ in their liquidity cushion arrangements. While USDT enjoys a substantial cushion, these other stablecoins lack the same level of backing, according to the report by the company.

Tether reported a substantial net profit of USD $1.48 billion for Q1 2023, doubling its earnings from the previous quarter, which stood at USD $700 million. This remarkable surge in profits was accompanied by an increase of 20% in the circulation of Tether’s token, Finance Magnates reported. Additionally, Tether unveiled USD $1.5 billion in Bitcoin and USD $3.4 billion in gold reserves.