Tether creates 1 billion USDT on Ethereum anticipating approval of an ETF
On Tuesday, Tether created $1 billion worth of USDT tokens on the Ethereum blockchain, taking advantage of the increasing excitement surrounding a potential approval for a spot Ethereum ETF. The surge in the market was fueled by optimism that the U.S. Securities and Exchange Commission (SEC) would give the green light for trading an Ethereum (ETH) ETF this Thursday.
The initial report of the minting came from Whale Alert on Tuesday, and Tether CEO Paolo Ardoino confirmed the news by announcing, “PSA: 1B USDt inventory replenish on Ethereum Network. Note this is an authorized but not issued transaction, meaning that this amount will be used as inventory for next period issuance requests and chain swaps.”
This move is not the first time Tether has created tokens in response to ETF speculation. In January, Tether minted $1 billion USDT tokens amidst rumors of a spot Bitcoin ETF. On that day, the price of Ethereum (ETH) ranged from $2,204 to $2,294.61.
The value of Ethereum has surged by 15% on Tuesday due to speculation, with other top-performing coins also experiencing significant gains. This surge is attributed to the increased likelihood of an Ethereum ETF approval, which rose from 25% to 75% after Fidelity updated its filings. Currently, Ethereum is priced at $3,726.78.
Many believe that this recent minting is a strategic move in anticipation of SEC approval for a spot Ethereum ETF. Ivan Sherbakov, CEO of Cryptorobotics, speculated that the tokens “will be used as liquidity to pump the market ahead of ETF news.”
The increase in USDT tokens suggests that more capital will enter the crypto market, particularly flowing into ETH and Ethereum coins. These tokens are held in Tether’s treasury as “authorized but not issued.” As per Tether’s Transparency page, there was $87.8 million worth of such USDT on Ethereum as of May 20.
This development comes as analysts at Deutsche Bank point out Tether’s lack of transparency. They caution about the potential severe repercussions if the USDT stablecoin were to collapse, given its dominant position in the stablecoin market, which currently exceeds $160 billion in total capitalization. Tether’s market cap surpasses $111 billion, controlling approximately 70% of the stablecoin market.
