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Tether Plans Stablecoin Backed by Chinese Yuan – Here’s Why it Could Back-Fire
Tether will soon issue a stablecoin – backed by the off-shore Chinese Yuan. According to Dong Zhao, a shareholder of Tether’s sister company Bitfinex, told ChainNews on Wednesday that CNHT will be launched “in the near future.”
This comes at a time when the Chinese Government authorities are working on the ‘Digital Renminbi’ themselves. According to Dovey Wan, a crypto-analyst, this move from Tether will not be received well by the Chinese.
The 24-hour volume of USD-Tether is often greater than even Bitcoin’s trading volume. Moreover, the total market capitalization of Tether is about $4 billion as well. Nevertheless, the demand for CNHT might not be as high as USDT. Dovey Wan mentioned that,
I don’t see enough demand for CNHT and alike, as local Chinese will still trade $USDT with CNY, if it’s CNH it will be the same as USD
This is because CNH and CNY are fundamentally two different currencies w.r.t. the Chinese economy. While CNY is the on-shore currency regulated by the People’s Bank of China, CNH is the offshore Chinese currency that trades in the foreign currency markets. Hence, the demand for the off-shore stablecoin in China is expected to be low.
Reportedly, the cryptocurrency lending platform, RenrenBit, will invest in the Tether stablecoin. Tether also intends to continue with its banking partner, the Deltec Bank in Bahamas. Dovey Wan, mentioned that this might ‘piss off’ Chinese regulator. She said,
Chinese regulator can be easily pissed by this, hope it won’t burn Tether …
The Chinese authorities are in the final stages of launching their Central Bank Digital Currency. Reportedly, due to the influence of tether, they are introducing certain changes to its design, to increase interoperability. However, whether or not the authorities will welcome independent efforts like Libra and stablecoins is highly uncertain.
Do you think that Chinese stablecoin will increase the on-ramp for crypto? Please share your views with us.
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