Tether Unveils 'Novel' Alloy, Offering 'Synthetic' Dollars Backed By Tokenized Gold

Stablecoin giant Tether, which now calls itself "the largest company in the cryptocurrency industry," has announced the launch of a "novel" product line called Alloy by Tether that is backed by tokenized gold.

"Alloy by Tether introduces a novel category of digital assets known as tethered assets, designed to track the price of reference assets through stabilization strategies like over-collateralization with liquid assets and secondary market liquidity pools," the company said in a press release Monday.

The first token in the Alloy by Tether lineup is aUSDT, which Tether said is a digital currency designed to track U.S. dollar value. It is over-collateralized by Tether Gold (XAUT), which means the coin is backed by real physical gold being stored in Switzerland.

Investors can mint aUSDT by depositing XAUT as collateral. It is worth noting that XAUT has a $570 million market cap, which makes the aUSDT XAUT combo very useful for users "who want to engage in digital transactions, payments, and remittances with a currency that feels as familiar as the U.S. dollar without having to sell their XAUT," Tether said. Once minted, users create a digital currency linked to the strength of gold's price, which, according to Tether, should redefine stability in the digital space.

Tether CEO Paolo Ardoino called aUSDT a "synthetic dollar." He also noted that the new product lineup is "an open platform." He went on to reveal that collateralized digital assets will soon be included under Tether's crypto tokenization platform that the stablecoin behemoth is planning to launch later in 2024.

As per the Alloy by Tether website, gold-backed currencies can help prevent inflation due to the limited amount that can be minted, paving the way for a "natural" control of money supply that could drive economic stability.

The announcement of Alloy by Tether and the unveiling of its first product comes several weeks after Tether went through a reorganization that expanded its business to cater to four new business divisions.

Tether, which is behind the world's largest stablecoin, USDT, said in April its expansion beyond the stablecoin business marked a transition in how it approaches "financial empowerment." The new "core" crypto subsectors within its business are Data, Finance, Power and Edu(cation).

Based on its latest product lineup, it appears Tether is moving fast toward its tokenization goals, which the company said in April will fall under Tether Finance, a core department that will serve as the company's "cornerstone" for financial offerings and crypto token products.