Blockchain monitoring accounts have flagged the authorization of $1 billion worth of Tether (USDT) in Tether’s Treasury. This authorization was set up to provide short-term liquidity for the Tron network.
The blockchain tracking service WhaleAlert highlighted the $1 billion authorization on Twitter, drawing a quick response from Tether’s Chief Technology Officer, Paolo Ardoino. He stated that the USDT would serve as inventory to “augment” the Tron network. Ardoino further clarified that this authorization is not an actual issuance; the allocated funds will be used as inventory for upcoming issuance requests and chain swaps onto the Tron network.
According to Tether’s official Frequently Asked Questions page, USDT needs to be “authorized but not issued” to ensure the token creation and issuance process. Authorizing USDT in Tether’s Treasury allows the company to issue USDT immediately upon receiving customer funds, ensuring that the issuer maintains a 100% reserve.
As previously reported by Cafebitcoin, the USDT token issued on the Tron blockchain reached an all-time high in 2023, with 42.8 billion USDT in circulation, surpassing Ethereum’s blockchain with approximately 39 billion USDT in circulation.
Tether’s CTO recently explained that similar authorizations of USDT had been flagged by blockchain trackers, with the 1 billion USDT being forged to support chain swaps on the Ethereum network in June 2023.
In 2023, Tether witnessed its market capitalization surpass $83 billion, having earned around $16 billion USDT since January. USDT remains the leading market-cap-backed stablecoin, pegged to the U.S. dollar.
In contrast, Circle’s USD Coin (USDC) saw its market capitalization decrease from $50 billion at the beginning of 2023 to $26 billion at the time of writing.