Tether Redeems and ‘Burns’ Over Half of Stablecoin USDT in Circulation
Tether, which is the creator of the dollar pegged stable coin USDT, has announced that it has “redeemed a significant amount” of USDT crypto tokens from the circulation and is on course to “destroy” 500 million USDT from its treasury wallet.
According to the announcement made by Tether, this leaves 446 million USDT in its treasury, which can be used for future USDT issuances. The tokens redeemed and “burned” represent 52.8% of the total previous supply.
The redemption reflects on the OMNI blockchain explorer, which provides details of a confirmed transaction worth 500 million USDT in block 547155. Tether’s announcement recommends crypto investors to refer to the “conceptual” outlines of the token issuance and redemption process as explained in its white paper. The process as detailed in the white paper is as follows:
“every tether issued or redeemed, as publicly recorded by the Bitcoin blockchain will correspond to a deposit or withdrawal of funds from the [company’s] bank account.”
The white paper further elaborates that for the crypto side of its accounting processes, the transparency and unrestricted access offered by the Bitcoin (BTC) blockchain – on which tethers are created and distributed via Omni Layer’s protocol – makes sure that the token trades can be verified and monitored.
Omni Explorer shows that Tether’s token reserves currently stand at 466,678,763.48, which is in accordance with the company’s statement.
As far as fiat accounting is concerned, the white paper explains that, as a portion of “the ‘Solvency Equation’ for the Tether System […] the provability of [U.S. dollar reserves] will rely on several processes,” including Tether’s declaration of bank account balances on its funds balance page (“Proof of Funds”), and professional audits.