In light of several U.S.-based banks severing their crypto ties, stablecoin issuer Tether has partnered up with Bahamas-based private bank Britannia for dollar transfer processing.
Tether Turns To Bahamas For Banking Needs
According to the latest reports, Tether has integrated the Britannia Bank & Trust Ltd. to process dollar transfers on its platforms. Although the stablecoin issuer has not directly addressed these reports and it is not clear when the banking relationship between the two started, people familiar with the matter have claimed that Tether had instructed clients to send money to Britannia’s bank account in the last few months.
The firm has also integrated other banks like Deltec and Capital Union into its platform.
Banking Exodus Among Crypto Firms
There has been a recent spike in regulatory scrutiny in the United States. Regulators are coming down harder on crypto firms and on banks that associate with them. They clearly do not want a repeat of last year’s FTX massacre, which spread like a contagion, taking down financial institutions like Silvergate Capital, Signature Bank, and Silicon Valley Bank.
Due to the increasing oversight into banks associated with crypto firms, many US-based crypto firms have had to turn offshore to look for banking partners. The integration of the Bahamas-based Britannia Bank indicates that Tether, too, has had to join the ranks of the firms driven out of the U.S for their banking needs. The integration will allow the firm to process its dollar transfers.
Tether’s Growth In 2023
Since stablecoins are pegged on a 1:1 ratio to the US dollar, it is highly useful, especially to crypto traders who use them to move their digital assets from one exchange to the other. A significant chunk of these traders particularly use Tether’s USDT stablecoin due to its popularity and extensive market cap.
The USDT has had a solid run, despite the market instability during the first quarter of 2023. It rallied over 20% during those four months and reached a market cap of $80 billion despite the market crisis. Currently, it has stabilized at a market cap of $82.9 billion, occupying 66.5% of the total crypto market.
Concerns Over Asset Reserves
However, the firm has remained vague about how it accesses and stores its billions of dollars of assets that are used to back the dollar, leading to some concern in the market. The company was almost in some legal trouble with a class-action lawsuit that was filed on charges that Tether had falsely advertised its USDT stablecoin. However, the lawsuit was dismissed, citing a lack of merit by the court judge.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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