“Volume is a metric that can be subject to manipulation, so it is much more important to look at liquidity as the key metric that makes sense and that can’t be easily inflated,” Ardoino said.
Despite its legal controversies, Tether is still the most used stablecoin, with a $4.1 billion market capitalization that has continued to grow.
“It’s clear the market trusts Tether to offer USD-backed tokens, so it makes sense that Tether wants to offer gold-backed tokens,” said Tushar Jain, managing partner at crypto hedge fund Multicoin Capital in Austin, Texas.
Efforts to digitize gold have a long history. At one point millions of people bought an online currency known as e-gold, before it was suspended about a decade ago due to legal issues.
“No one has had much success with non-USD stablecoins, or gold-backed crypto, so I don’t anticipate anything major happening here,” said Aaron Brown, an investor and a writer for Bloomberg Opinion.
The exact logistics of how Tether Gold will work are still unknown. Paxos, for instance, stores all its gold in Brink’s vaults, and everyone who owns its tokens owns the underlying physical gold, held in custody by Paxos Trust Company -- so it can be redeemed for actual gold bars.
Whatever it is, traders are already getting ready for it.
“I wouldn’t be surprised if there was significant customer interest,” said Sam Bankman-Fried, the Hong Kong-based chief executive officer of crypto trading firm Alameda Research. “A lot of crypto traders also have opinions on gold.”
This article was provided by Bloomberg News.