Cryptocurrency exchange Bitfinex has announced it will support trading of USD denominated stablecoin Tether (USDT) against fiat USD from Friday.
Bitfinex Hedging A Hedge
The curious decision, which the exchange revealed in a blog post just hours before the pair went live, appears to be the first of its kind in the cryptocurrency industry.
Each unit of USDT is notionally backed by 1 USD, and the stablecoin is designed to be used as a cryptographic hedge against volatile assets without the need to convert into fiat.
The exchange rate of USDT 00, in reality, tends to fluctuate slightly around $1. For example, this year saw Tether price drop to as low as $0.85 during a period of high volatility.
Bitfinex’s tacit admission that USDT is insufficient as a stable alternative to USD is made all the more unusual by the fact that the platform and Tether share the same CEO.
“Today, adding margin trading on USDT/USD pair will not only allow for more efficient price discovery, but in an important move for risk management, unlock the ability to hedge the exposure taken on stablecoins,” officials wrote in the blog post.
Along with a dedicated lending market, USDT will be available as collateral for margin positions.
Tether-Bitfinex Media Rumors
The move comes days after an investigation by Bloomberg allegedly put to rest rumors that Tether did not hold full USD reserves for its token supply.
Such rumors had abounded during 2018 since both Tether and Bitfinex received subpoenas from US regulators late last year and had grown to include accusations the latter was insolvent.
Last month, Tether succeeded in switching banking partners to Bahamas-based Deltec, capping separate scrutiny of the financial buoyancy of its original banking partner Noble Bank.
A wealth of both USD and other stablecoins has come to market in recent months, with exchanges adding multiple assets in a bid to provide users with options against rapidly declining major crypto tokens.
What do you think about Bitfinex launching trading of Tether against USD? Let us know in the comments below!
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The post Bitfinex Opens Trading of USD-Pegged Tether Against USD appeared first on Bitcoinist.com.
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