Tether winds down gold-backed derivative stablecoin aUSDT

Stablecoin issuer Tether is winding down Alloy by Tether and its gold-backed, overcollateralized aUSDT stablecoin after just two years to focus on products and areas with stronger demand. 

Tether announced its “strategic changes” on Wednesday following a review of user activity, market demand, and the company’s “broader priorities.”

Tether said it has decided to focus resources on areas where it is seeing “stronger user demand, deeper liquidity and broader long-term market opportunity,” including its gold-backed digital asset XAUT and other core products across its ecosystem.

While stablecoins remain Tether’s core business, the company has shown a growing interest in technology outside stablecoins. Its investments include Bitcoin mining infrastructure, artificial intelligence, cloud computing and robotics. Most recently, it led German tech company NEURA’s $1 billion funding round on June 11. 

Tether’s aUSDT is an overcollateralized derivative product built on top of XAUT using Ethereum smart contracts, which also reflects the demand for gold-backed and tokenized real-world assets. 

Alloy by Tether allowed users to deposit XAUT as collateral to mint aUSDT, with the value of XAUT locked exceeding the value of aUSDT issued, similar to how some stablecoins or synthetic dollars are created against crypto collateral in DeFi.

Users could borrow or mint against their XAUT holdings, letting them access dollar-like liquidity without selling their gold exposure. 

Alloy by Tether, announced in June 2024, has a current market capitalization of $1.2 million and is backed by 14.73 kilograms of gold worth around $2.2 million, according to Tether. 

Tether Gold remains popular 

The winding down will happen in phases, the first of which starts immediately by preventing the opening of new positions or the minting of new aUSDT. Users have three months to return their aUSDT and reclaim their XAUT until the cut-off date on Sept. 17.

Related: Tether expands robotics push with lead role in NEURA's $1B-plus funding round

XAUT remains popular with a market capitalization of $3 billion and is backed by 22,169 kilograms of physical gold, according to the company.

Its market cap surged earlier this year when gold prices hit an all-time high of just over $5,300 per ounce. However, it has retreated by 19% since then. 

Tether also bought a 12% stake in precious metals platform Gold.com for $150 million in February, with plans to integrate XAUT into the platform. 

Chinese yuan and euro stablecoins axed  

Alloy by Tether is not the only product the company has shelved this year. 

In February, Tether announced it was discontinuing its Chinese yuan stablecoin, CNHT, citing “evolving market conditions, low interest in the product, and limited sustained community demand,” relative to other supported assets.

In November, it wound down its euro stablecoin, EURT, citing European regulatory issues and a focus on other initiatives such as Hadron, its asset tokenization platform launched in 2024. 

However, in May, Tether announced that it planned to launch a Georgian lari stablecoin, GELT, in cooperation with the government of Georgia. 

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