Tether Holdings revealed that it is storing $8 billion worth of gold in a private vault in Switzerland. This vault is owned and controlled by Tether itself. The company says the gold is kept in a very secure place, but it won’t share the exact location or when the vault was built.
Tether is now based in El Salvador. It issues USDT stablecoin, which is a popular digital token that is supposed to stay equal in value to the U.S. dollar. Right now, there are about $159 billion USDT tokens being used around the world, according to Bloomberg report.
The company receives actual dollars when users buy the tokens and then invests those funds in assets like US Treasuries and precious metals. As of March, gold and other commodities made up nearly 5% of its reserves, according to its latest report.
Tether shared that it holds nearly 80 tons of gold, which is a large amount for a private company. In fact, Tether now holds almost as much gold as UBS Group AG, a big Swiss bank that also keeps gold and shares its gold data publicly. Most companies that hold gold use outside vault services and pay fees to store it. But Tether chose to build its own vault to save money.
“If Tether’s gold token was to grow to $100 billion in circulation, it’s a lot of money to pay 50 basis points,” Ardoino explained. “If you have your own vault, eventually with the size, it gets much cheaper to do custody.”
Tether also offers another product called XAUT. It is a digital token backed by real gold. Each XAUT token represents one ounce of gold. If someone owns a token, they can claim real gold in Switzerland. So far, the company has issued tokens backed by 7.7 tons of gold, which is worth about $819 million.
Moreover, some governments are now making new rules for stablecoins. In the European Union and the United States, these new rules say that only cash or short-term government bonds should back stablecoin, not gold or other assets. If Tether wants to operate in those places, it may need to sell its gold to follow the law.
“Gold, I think should be logically a safer asset than any national currency,” Ardoino said. He also said central banks in BRICS countries are buying more gold, which is pushing prices up.
Also Read: Tether Backs Crystal Intelligence in Blockchain Crime Crackdown
