Tether has entered the Latin American market with the newly launched Mexican peso-pegged stablecoin.
The stablecoin, known as MXN₮, will first be offered on the Ethereum, Tron, and Polygon blockchains. According to Tether, the stablecoin is tied 1:1 to the Peso, which means that each MXN token is worth one Peso. It was first released on the Ethereum, Tron, and Polygon blockchains. Tether created the MXN coin in response to the rising prominence of cryptocurrency in Latin America.
MXN₮ is Tether’s latest fiat-pegged stablecoin, following USDT, EURT, and the overseas Chinese Yuan-pegged CNHT.
Tether’s chief technical officer, Paolo Ardoino, stated that the surge in cryptocurrency use in Latin America prompted their choice to “expand.” He added that the creation of a stablecoin tied to the peso would provide a means for Mexicans to hold wealth.
“Over the last year, we’ve observed an increase in bitcoin usage throughout Latin America, which has made it clear that we need to extend our offers,” Paolo stated. “For individuals wishing to shift assets from fiat to virtual currencies, MXN₮ can reduce volatility.”
Tether announced the plan by citing research suggesting that around forty percent of Mexican enterprises want to “implement blockchain and cryptocurrency in some form.” Furthermore, the “multibillion-dollar flow of remittances into Mexico and the challenges associated with money transfers have provided a once-in-a-lifetime potential for stablecoin usage and acceptance.”
USDT, USDC, and BUSD are popular fiat-backed stablecoins. With $72.6 billion in circulation, Tether’s USDT is the biggest stablecoin by market value. With about $53 billion in circulation, the USD Coin was the second-largest.
The team also stated that the move would benefit the expanding industry by serving as a test platform for bringing new cryptocurrency users to the region. They also mentioned that this might establish a precedent for launching other peso-pegged stablecoins.
Despite concerns about their backing, Tether has typically maintained steady pegs. However, several so-called algorithmic stablecoins have shown to be less trustworthy than the market in recent weeks, garnering official investigation.
The UST stablecoin, whose peg was secured by a complicated self-executing algorithm instead of real cash reserves, lost its peg earlier this month and dropped dramatically.
The USDT momentarily lost its peg during the crisis, falling from $1 to $0.95 on May 12. Tether asserts that, unlike UST, USDT is backed by a combination of commercial paper and US Treasury notes.
Since May 11, 2022, speculators have cashed out about $10 billion in Tether tokens following the crash of algorithmic stablecoin. UST shocked the crypto industry and forced investors to reconsider their stablecoin bets.
Tether stated that redemptions were not a concern and that it had more than adequate resources to cover the value of all circulating tokens. In addition, tether provided an attestation of its reserves by independent accountants on May 19 that indicated the business had raised the quantity of US Treasury bills in its reserves while decreasing its riskier commercial paper holdings by 20% since the start of the second quarter.
Author: To The Verge Team
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