Tether launches Mexican PESO-pegged Stablecoin

2022-06-17, 02:29

[TL;DR]
Block-chain stablecoin platform, Tether, has added another Token, MXNT to its growing list of Stablecoins. The crypto platform announced the newest addition on May 26th, a token, (MXNT) pegged to the Mexican currency Peso.

Per Paolo Ardonio of Tether; the move was inspired by a need to harness the swiftly rising affinity to digital currency in Latin America. Over the previous year, the acceptance of crypto has increased in this growing market, most especially in Mexico.

Going by Triple A, a Mexican Crypto info service, 3.1 million Mexicans currently hold various cryptos. That is 2.5% of the entire population. Furthermore, 40% of the companies in the North American republic are seeking to incorporate crypto and blockchain in one form or the other.

Consequently, Tether hopes to create a supply of value for the upcoming economy, especially in Mexico. The MXNT, pinned on the Mexican Peso 1:1, is the most recent in its inventory of stablecoins.

Other such coins in their repository include the CNHT; pinned on the off-shore Chinese Yuan and the EURT linked to the Euro. Finally, they have the initial and most widely accepted digital currency offering in the crypto-verse, the USDT equivalent to the US dollars.

The introduction of the Mexican fiat equivalent token (MXNT) marks another breakthrough for Tether. It serves as their debut stablecoin entrance into the Latin American marketplace. It will be obtainable on Polygon, Ethereum, and Tron to start with.
Read on to catch the full story.

Keywords: Stablecoins, Peso-pegged, Peso-pegged stablecoins, MXNT, Latin America, Latin American market, Mexican stablecoin, Tether Stablecoins, Tether.

The News in Full.

On May 26th, 2022, Tether, a hong-kong incorporated blockchain network tweeted that it is releasing a new stablecoin, MXNT. The new offering, equivalent to the Mexican Peso 1:1 will initially be offered on three crypto platforms Ethereum, Polygon, and Trom. It is the fourth pegged stablecoin Tether has gifted the crypto market. Others include the bestselling USDT, the off-shore Chinese CNHT, and the Euro pegged EURT, more on that later.

Paolo Ardonio, CTO of the stablecoin behemoth, explained the inspiration behind their latest move. According to him, the Latin American economy has seen an upsurge in crypto usage in the past year.

Hence, providing a Peso-backed stablecoin would act as a repository of value for the upcoming market, especially in Mexico. MXNT like other stablecoins will create a buffer against instability for those transferring their assets between Fiat Money and Digital currencies.

Tether’s decision is not misplaced considering the marketplace analytics as per Triple A. The cryptocurrency information service recorded that 3.1 million persons, 2.5% of the Latin American country's population hold cryptocurrency.

Moreso, 40% of Mexican companies are actively looking for ways to incorporate digital currencies. Of these businesses, 71% focus entirely on cryptocurrency uses. This makes Mexico a viable point of entry for Tether into the Latin American Market.

More About Stablecoins.

Stablecoins are digital assets that are backed by a traditional currency or fiat. These assets enable their holders to transact freely on the blockchain in the same way as digital currencies.

However, the tokens have real-life money backing them which makes them immune to the instability of the crypto market. Investors and traders can use them as a stable point for withdrawing from positions in the marketplace.

Tether has launched 3 stablecoins before their most recent MXNT all of which have a 1:1 peg to the matching fiat money. All of Tether's coins have full reserve backings which the company publishes in quarterly reports.

Source: Outlook India.

Tether’s Fabulous Four.

The initial stablecoin Tether created was the USDT which is equivalent to the US dollars in 2014. It has become the most wide-reaching stablecoin in circulation with a total stock of $73 billion at writing. Each unit of USDT has a dollar equivalent backed up in assets and reserves.

In 2019, the blockchain-powered company launched another stablecoin, this time pegged to offshore Chinese-Yuan, they called it CNHT. It is obtainable on the Ethereum Blockchain as an ERC-20 token.

There is a Euro-backed stablecoin as well, the EURT which has 210 million tokens in circulating supply and 400 million in total. Just like the other stablecoins, each EURT token is pegged to its native real-life currency, 1 EURT to 1 Euro

Tether also has a Gold pegged token, XAUT and of course, the latest Mexican peso pegged MXNT.

How it Works

Tether Limited accepts deposits and withdrawals in fiat currencies, minting or burning tokens accordingly as their reserves require.

The stablecoins are administered by Bitfinex and powered on 11 blockchains among which are Ethereum and Polygon.

A Little Wrinkle in the Works.

Some consider this newest move (MXNT) by the stablecoin giant a trifle bold. This is considering the recent alarm when USDT momentarily depegged from its dollar marker and dropped to $0.95.

Not too long ago, the crash of another stable coin rolled over the entire crypto market. It affected even major platforms like Bitcoin and Ethereum. Terra USD, which was supposed to be pegged 1:1 to the dollar, lost its peg and crashed to almost nothing. With no stable fiat currency backing the token, it was unable to rally. Many people lost all their investments in the aftermath.

It was during this unstable period that Tether depegged due to a massive rush among holders to cash out investments. Out of fear, many moved their investments to platforms they considered even more stable. This caused the USDT market cap to drop by over $7 billion.

However, Tether stood firm and redeemed every claim, paying over $300million in 24 hours at the $1 peg. Paolo Ardonio affirmed this on Twitter saying they didn't even break a sweat to accomplish that as a reassurance to their community. In total, the stable coin creators paid out $10billion in withdrawals during that period which was responsible for the momentary fluctuations. However, Not long afterwards USDT regained its peg.

Previously, there had been a government investigation into Tether’s 1:1 claim which resulted in a transparency agreement. This agreement required them to publish Quarterly reports on the stablecoins’ assets and reserves for accountability's sake. The crisis proved that the agreement aged well and that the token was indeed stable.

In Conclusion.

Source: Fintech Insider.

Tether’s release of a Peso-pegged stablecoin could not have come at a more convenient time. The current increase in instability of the crypto market has attracted many to the safety of stablecoins.

More so, the team noted that their newest stable coin will act as a testing ground to onboard new members to the crypto world in Mexico. They believe it will be an invaluable asset to the region, acting as a precedent for more of MXNT's kind.
Tether Limited continues to act as a bridge between traditional currencies and the crypto world. A traditional bank but for Digital currency.

Author: Gate.io Observer: M. Olatunji
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