By
Benjamin Njiri
April 23rd, 2024
Backed by offshore yuan, the new stablecoin adds to three other Tether’s stablecoins pegged to such fiat currencies as U.S. dollar (USDT), Euro (EURT) and the Japanese yen (JPYT).
Tether, the company behind a controversial USDT stablecoin, has announced the launch of a new ERC-20 token based on the Ethereum blockchain. The new stablecoin tagged ‘CNHT’ is pegged directly to the offshore Chinese Yuan (CNH).
There are two kinds of national currency in China: offshore yuan is free from the monetary policies established in Beijing and can be traded freely on foreign currency markets, while onshore yuan trading is under control of the Chinese central bank, the People’s Bank of China.
Backed by offshore yuan, the new stablecoin adds to three other Tether’s stablecoins pegged to such fiat currencies as U.S. dollar (USDT), Euro (EURT) and the Japanese yen (JPYT).
The company’s announcement reads:
“CNH represents a further expansion of Tether’s capabilities in facilitating the digital use of traditional currencies, such as US dollar (USDT) and euro (EURT).”
Rumors about Tether considering the launch of a new stablecoin first appeared in August. At that time, Zhang Dong, CEO of RenrenBit and one of the shareholders of Tether’s affiliate exchange platform Bitfinex, stated that his crypto lending firm RenrenBit would be the first to invest in the ‘CNHT’ stablecoin. He also believes that a stablecoin backed by offshore yuan could boost the circulation of the fiat currency.
Dong added:
“CNHT will not interfere with PBOC [People’s Bank of China} capital control policy because CNH is different than CNY, as it’s already an offshore product. On the contrary CNHT will help China to expand the adoption of CNH for international settlements.”
At the moment, there are no further details about CNHT. It is also unclear where the yuan backing the stablecoin will be stored. Earlier, Zhang Dong stated that the reserves will be stored in a bank in Belgium, however, the information has not yet been proved.
Another Stablecoin Coming?
Launched in 2014, Tether enables businesses – including exchanges, wallets, payment processors, financial services and ATMs – to easily use fiat-backed tokens on blockchains. By leveraging Blockchain technology, Tether allows users to store, send and receive digital tokens person-to-person, globally, instantly, and securely for a fraction of the cost of alternatives.
In July of this year, Tether was integrated onto the Blockstream’s Liquid Sidechain Network designed to bootstrap and catalyze the execution of large volumes of transactions at lightning speed. With this inclusion, Bitcoin traders got access to neoteric features that were are not naturally made available on the Tether platform.
According to Zhao Dong, at the moment Tether is also mulling over the launch of a stablecoin backed by a basket of commodities such as gold, crude oil, and rubber. This idea is a good one and, if brought to life, can help reduce the risks associated with keeping large amounts of funds deposited in banks.