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 , 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 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.
