Tether Usage Shifts as US $120 Billion Stablecoin Review Increases – BNN Bloomberg

(Bloomberg) — Tether, the $120 billion cryptocurrency, has gained traction across Europe, the Middle East and Africa as its so-called dollar proxy faces greater U.S. scrutiny, according to a study.

This trend, Chainathesis Inc. It emerges in data on the first use of digital wallets containing stablecoins, also known as USDT, obtained from the consulting firm. Activations last from 9 a.m. to 2 p.m. Coordinated Universal Time, or UTC, which is equivalent to late morning or afternoon. Such as Moscow, Tehran, Kigali and Istanbul.

Chainalytics said the figures cover the period from January 1 to October 8 this year and provide an indication of geographies where USDT is seeing more buying. However, a Chainalytics spokesperson also emphasized that these are not definitive because a person can be located anywhere in the world no matter when they activate their wallet.

The data points to the possibility of USDT adoption in sanctioned countries such as Russia and Iran that do not have ready access to the global banking system. A similar study published three years ago by Chainalytics and The Block Research pointed to USDT’s popularity during Asian hours. At the time, Asia was a major source of speculative excitement fueling the digital asset boom during the pandemic.

Tether’s USDT is intended to hold a fixed value of $1, backed by reserves that the company says are mostly invested in U.S. Treasury securities. While cryptocurrency’s dominant stablecoin is a popular place to park funds for digital asset trading and lending, there are growing indications that it is also being used for payments around traditional banking rails.

Russian Commodities

For example, Bloomberg News reported in May that some Russian commodity firms that had difficulty trading Chinese commodities were using USDT. Such changes pose a challenge for regulators trying to control the flow of money.

Tether Head of Economics Philip Gradwell said analysis of data from vendors including Chainalytics showed that the share of activity in Europe, the Middle East and Africa has been stable over the past two years, shifting from the east to the west of the region. Gradwell added that in Africa, stablecoins are now widely used as an alternative for cross-border payments and value preservation.

On Oct. 25, the Wall Street Journal reported that federal prosecutors in Manhattan were investigating Tether Holdings Ltd. for possible violations of sanctions and anti-money laundering rules. According to the report, the US Treasury is considering imposing sanctions on Tether due to allegations that the token is used by organizations such as the militant group Hamas and Russian arms dealers.

In response to the second article, a spokesperson for Tether Holdings previously said the company was unaware of any such US investigations and emphasized that the firm has “well-documented and extensive engagements with law enforcement to take down bad actors.” Tether and other tokens.

African Demand

Cryptocurrency executives said the use of USDT for export and import invoices in Africa is likely a key part of the time frame shift captured by Chainaliz data. Tether touts the stablecoin as a way to make cheap and fast payments in developing countries where the US dollar is in short supply.

“We are seeing an explosion in stablecoin usage in Africa,” said Ran Goldshtein, senior vice president of payments and network at custody provider Fireblocks. He said Tether accounts for about 80% of African stablecoin activity.

In one example, Singapore-based TradeFlow Capital Management Pte trialled the use of USDT to facilitate transactions with Rwandan agricultural startup Ingabo Plant Health. Ingabo’s Chief Executive Patrick Senga plans to store his income in stablecoins to hedge against fluctuations in the Rwandan Franc. “On a personal level, I stopped using Swift and bank transfers,” he said.

Dominant Stablecoin

Although there has been controversy around USDT for years, Tether makes up the bulk of the $176 billion stablecoin industry. Its closest competitor is Circle Internet Financial Ltd.’s USDC, and activity levels appear to peak during US hours as USDT usage declines, according to Chainalytic data.

Stablecoin payments are still dwarfed by the trillions of dollars flowing through more traditional means every day. Even so, increased interaction with tokens is forcing authorities to issue special rulebooks and increase oversight.

“Risk management at the intersection of digital currencies and payments can be complex,” said Angela Ang, senior policy advisor at consultancy TRM Labs. “Legal and illegal payments are often indistinguishable from each other without context. Detecting illegal transactions is like looking for a needle in a haystack. “In payments, this is more like looking for a needle in a pile of needles.”

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