The stable cryptocurrency Tether (USDT) indexed to the US Dollar has been in the market since 2015. While 4 billion USDT was printed by 2020, only 5.5 billion USDT was issued in the first 6 months of this year. What is behind this demand?
2020 was the record year of stable cryptocurrencies, but especially Tether (USDT). The amount of USDT, which was 4 billion at the beginning of the year, exceeded 9.5 billion and is progressing with each passing day. So what is behind this demand and why has the USDT, which has been on the market for years, experiencing a growth that it has never seen before in the first 6 months of this year?
According to a new Sino Capital report shared with Decrypt, the answer is actually quite simple and most of the Chinese investors are part of the equation. The report states that the most important factor that swells new USDT issuance so much is the influx of Chinese buyers using over-the-counter brokers.
Matthew Graham, CEO of Beijing headquarters Sino Capital, says that the over-the-counter (OTC) market in China is much larger than people think, and USDT is the key to this money inflow.
According to some estimates, the demand for USDT comes from 100,000 Chinese retail and corporate buyers, many of whom have difficulty accessing other crypto markets. “USDT is a very popular way for Chinese crypto traders to enter the market,” the report said. It said.
While Bitcoin is considered a virtual property in China, that is, it is not forbidden to have crypto money, but exchanges are prohibited. Many stock exchanges that previously operated on Chinese borders carried their operations abroad. Still, Chinese citizens using VPN can access these exchanges. In addition, since 2018, the country has been preventing banks from serving crypto exchanges.
Tether (USDT) works well in the midst of bans
Stable cryptocurrencies come to Chinese cryptocurrency customers in an environment where banks are banned. Stable cryptocurrencies, a highly liquid asset, can also be used on all major Southeast Asian exchanges and without permission.
These cryptocurrencies are distributed by OTC trading desks, a brokerage model that became popular in China after the Cold War era.
In China, the trading of Bitcoin with yuan is not technically illegal, but everyone’s bank account is confiscated and even closed. Speaking to Decrypt on the subject, an OTC employee says that Bitcoin trading with USDT is not entirely legal but tolerated. This employee says his company serves 100 major customers with a volume of over $ 5 billion annually depending on the price trends of Bitcoin.
Finally, Tether and Bitfinex’s technology director, Paolo Ardoino, recently made a statement, saying that OTCs and exchanges demand direct dollars, which has increased demand.