A top-20 exchange is phasing out an embattled cryptocurrency.
Digifinex has decided to replace tether (USDT), perhaps the best-known “stablecoin” designed to maintain a steady exchange rate with the U.S. dollar, with a rival, TrustToken’s TrueUSD. Based in Singapore, Digifinex handled $131 million in trading volume over the past 24 hours, according to CoinMarketCap, making it the 16th-largest exchange by that measure.
Kiana Shek, Digifinex’s co-founder, told CoinDesk she’d been “looking for ways to get rid of USDT” for months, adding, “I simply don’t believe in tether but I had no choice” but to list it.
Speaking of the decision to adopt TrueUSD, Shek said, “through my research, due diligence, and my communications with the TrustToken team, I have come to appreciate their commitment to industry-leading best practices.”
She mentioned the team’s compliance with the U.S. Financial Crime Enforcement Network’s (FinCEN) regulations and independent verification by an outside auditing firm.
Tether, the company behind USDT, did not give a comment by press time. The firm has been the subject of much negative attention for over a year now, as it has struggled to convince observers that it holds enough dollar reserves to fully back all the USDT in circulation.
Despite allegations that the Tether’s owners and management – which overlaps with that of the cryptocurrency exchange Bitfinex – are printing money, though, USDT’s value remains pegged to $1.00, and many exchanges list multiple trading pairs in USDT terms.
These listings appeal to traders because USDT can be more easily shifted between exchanges than fiat currency. And at the time of writing, tether is the eighth-most valuable cryptocurrency by market capitalization.
Growing competition
It is notable, therefore, that a large exchange has decided to move away from offering tether trading pairs and adopt a rival stablecoin instead. Given the high number of stablecoins that have recently launched or are set to launch soon, the competition Tether faces is likely to increase.
“The risk from Tether and the need for a new USD stablecoin is so great,” TrustToken co-founder and COO Stephen Kade told CoinDesk, “that exchanges have started trying to create their own.” An example of this trend is the Gemini exchange’s recent announcement of a dollar-pegged cryptocurrency.
Kade argued that TrueUSD had an advantage over these rivals, however: “TrueUSD is live and exchange-agnostic,” he said.
TrustToken launched TrueUSD in March, the company’s head of marketing and communications Tony Pham told CoinDesk, and plans to launch products linked to the yen, euro and other fiat currencies in the future. And if the goal of wide adoption by exchanges sounds ambitious, TrustToken’s broader push – to tokenize practically any form of asset – is even more so.
TrueUSD trading will become available on Monday at 15:00, Singapore time. Initially, Digifinex will offer TrueUSD trading pairs with bitcoin, ethereum and tether.
Both tether and TrueUSD trading will remain available for a while, said Pham, before tether is dropped from the exchange.
Additional reporting by Brady Dale
Weights and measures via Shutterstock