The company behind the world’s most popular stablecoin, Tether, has announced a new offering in its lineup. In an effort to attract Chinese traders the Hong Kong-based firm has announced the launch of a digital Yuan.
It has been well documented recently that China’s central bank has accelerated its research and development with views to launching its own centralized digital currency.
People’s Bank of China (PBoC) officials have even gone so far as to say they’re looking towards Facebook’s Libra for inspiration.
They’ll be waking up in a bad mood today as Tether appears to have beaten them to the punch.
In a blog post and tweet published on Monday, Tether announced that it has added the offshore Chinese yuan (CNH) to its basket of supported currencies.
The new offering – called CNHt – will be an ERC20 token that is pegged to the real Yuan.
Offshore Chinese yuan (CNH) added to our basket of supported currencies, new stablecoin CNHt now available!
— Tether (@Tether_to) September 9, 2019
The company appears to be cashing in on the current state of economic turmoil in the East.
Outlook bleak for China’s Yuan
China’s currency has fallen to its lowest levels against the US dollar in over a decade in a move fuelled by an escalating trade war imposed by the Trump administration.
A negative correlation to the price of Bitcoin has also been observed, and it hit a record low recently according to Bloomberg.
Tether’s CNHt will now eliminate the need to use fiat when trading Bitcoin, offering liquidity between the assets should the promised peg be maintained.
Demand for Bitcoin has been higher in China in recent weeks and this can be observed by the price premium on exchanges catering to Chinese traders.
Hedging their bets
It is clear that both China and its citizens are increasingly looking towards safe-haven assets as their own currency undergoes further manipulation by the PBoC which is attempting to protect itself from Trump’s trade tariffs.
This week it was reported that China is adding to its stockpile of gold and has now amassed 100 tons of the commodity.
The run on the yellow metal has pushed prices to a six-year high as demand ramps up amid global recession fears.
In a similar move, it appears that the Chinese are hungry for Bitcoin and have developed ways of accumulating the asset beyond the prying eyes of state monitors.
The PBoC is unlikely to be happy with Tether’s move on its territory as is clearly wants to use its own crypto Yuan to control and monitor monetary flows within the country.
China is among an increasing number of nations that have imposed capital controls on its people to stem the outflow of finances.
A blow to crypto in China?
The Block’s Mike Dudas hinted that the new stablecoin, which is beyond Beijing’s control, could have a negative impact on the overall crypto scene in China, which is already heavily scrutinized.
"A Chinese market observer tells The Block that, due that China's strict capital controls, a product like CNHT will draw more attention from Chinese regulators, which may negatively impact the Chinese crypto community."https://t.co/pjgfgkFyC2
— Mike Dudas (@mdudas) September 9, 2019
Either way, there is a clear demand for safe-haven assets from both the central bank and the people of China. They have now just been given another method to get them.