Tether Ltd., the controversial issuer of the tether stablecoin (USDT), which aims for parity with the U.S. dollar, announced Tuesday that it would reopen account verification for new customers and enable customers to redeem tether for fiat currency directly through its platform.
“Tether is able to return to its original vision of having a wallet for creating and redeeming directly on its own platform without having to rely on a third party,” the company said in a post on its website. “This update allows the immediate withdrawal of Tether to fiat (1:1), with the ability to acquire coming soon.”
Notably, withdrawals will be subject to a high minimum of $100,000 and significant fees.
Tether’s white paper says that token holders are able to redeem their USDT directly for dollars, which the white paper says the company holds in bank accounts at a one-to-one ratio with outstanding USDT tokens.
Questions about Tether’s access to stable banking partners – and the lack of a full audit, which the company had promised – have caused an erosion of confidence in the the token’s fiat backing, leading the exchange rate to break dramatically with the dollar at one point in mid-October.
Tether is now banking with the Bahamas-based Deltec, which the company noted in Tuesday’s announcement.
The direct redemptions promised in the white paper came to an end following a November 2017 security breach. However, restrictions on deposits and withdrawals had been in place since April 2017, when Wells Fargo stopped providing correspondent banking services to Tether’s Taiwanese banking partners.
While transactions from the Tether website were halted following the November 2017 breach, the company encouraged buyers “to use the services of any one of a dozen global exchanges to acquire or dispose of Tethers for either USD or other cryptocurrencies.”
Since that time, customers have been able to deposit USDT to the Bitfinex exchange – which has overlapping shareholders and management with Tether Ltd. – and withdraw fiat, although many customers have complained that they waited weeks for their money to arrive.
Some gave up and cancelled the withdrawals, transferring their USDT to another exchange, such as Kraken, which offers a USDT-USD trading pair. Following persistent complaints from customers regarding delayed withdrawals, Bitfinex announced new fees for large or frequent fiat withdrawals.
In Tuesday’s announcement, Tether said that withdrawals and deposits would be subject to minimums of $100,000 and 100,000 USDT, respectively.
It also detailed fees for depositing or withdrawing fiat from the platform. Depending on the size of the withdrawal, fees range from 0.4 percent (or $1,000, if greater) to 3 percent. Customers can only withdraw fiat once per week, and higher fees will be charged for those withdrawing more than once per month.
For deposits of any size, fees are a flat 0.1 percent.
Bitfinex trading pair
Bitfinex also made an announcement related to tether on Tuesday, saying that customers would be able to trade USDT directly for dollars through a trading pair. It also announced a trading pair for euros and the euro-linked EURT.
Bitfinex called this policy “Tether neutrality.” The policy appears to amount to allowing the rate at which USDT can be redeemed through Bitfinex to float according to market conditions.
Whereas previously the rate of exchange was locked in at $1 to 1 USDT – because the exchange only allowed deposits and withdrawals – Bitfinex will now offer direct trading pairs.
Across all major exchanges, tether’s market value hit its lowest level on Kraken in mid-October, briefly trading for just $0.85.
Tether image via Shutterstock