• Tether has integrated with Bahamas-based Britannia Bank and Trust for dollar transfer processing.
  • Meanwhile, the full context of the stablecoin issuer’s banking relationships remains uncertain despite its $86 billion backing USD.
  • Experts say this secrecy impedes the industry, limiting regulatory approvals while discouraging risk-averse traditional players from increasing participation.

Tether (USDT), the famous stablecoin issuer, has integrated with a privately owned bank based out of the Bahamas for its dollar transfer processing. It comes as banks in the US continue to sever ties with crypto due to heightened scrutiny by regulatory bodies. The clampdown has compelled several firms to shift their businesses to other jurisdictions with better offerings.

Also Read: SEC resorts to rare tactic, files secret motion against Binance

Tether looks to the Bahamas for USD transaction processing

A Bloomberg report has revealed Tether’s new ties with Bahamian Britannia Bank and Trust. The integration is meant to help the stablecoin issuer in processing its dollar transfers.

Stablecoins are one of the most useful classes of tokens in the crypto realm, providing a means for traders to move their digital assets from one exchange to the other. They are pegged on a 1:1 ratio to the USD.

It is worth noting that USDT is the most popular stablecoin, with the majority of crypto traders and enthusiasts using it to leverage their crypto-related trades. FXStreet has reached out to Tether for full details of the integration, pending feedback.

Meanwhile, the fact that Tether remains rather vague about its banking association remains a concerning subject, as there is no clarity to how the firm accesses and stores the $86 billion of assets it uses to back the Dollar.

Experts have raised concerns over Tether not being clear about its banking relationships. For some, the lack of transparency is a major barrier. As Patrick Tan, general counsel for blockchain data analytics firm ChainArgos, puts it:

It [the secrecy] continues to be a major impediment for developing the cryptocurrency industry, deterring regulatory approvals on other matters, and discouraging traditional asset managers with little tolerance for regulatory risk from more active participation in the space.

Nevertheless, crypto firms continue to look away to jurisdictions with better business environments for their offerings. The move comes as they avoid regulatory scrutiny that has intensified this year.

The alleviation of the regulatory microscope is not limited to crypto firms, as financial institutions like banks have also succumbed to the pressure.  

Banks severing ties with crypto

Banking or money lending institutions in the US have shown clear intention to separate from crypto-related firms, repelled by intense scrutiny from regulatory bodies across the country. The crackdown has some thinking of crypto firms in the US facing the risk of becoming unbanked for the most part.

US lenders have demonstrated reluctance to serve crypto firms, a decision attributed to the collapse of Sam Bankman-Fried’s cryptocurrency empire, FTX. The implosion broke a pattern of banks embracing crypto firms, including the oldest bank in the US, BNY Mellon, and American banking giant State Street.

After FTX, banking regulators began warning banks about links to the crypto industry. This saw lending institutions such as New York’s Metropolitan Commercial Bank and Signature Bank begin severing relationships with crypto customers including Binance Exchange

In the aftermath, the actions constrained crypto firms’ access to payment onramps and offramps requisite for business operations. Market observers have faulted unfavorable regulations in the US for threatening to dampen America’s role in the emerging industry.

Cryptocurrency metrics FAQs

What is circulating supply?

The developer or creator of each cryptocurrency decides on the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted by mining, staking or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. Since its inception, a total of 19,445,656 BTCs have been mined, which is the circulating supply of Bitcoin. On the other hand, circulating supply can also be decreased via actions such as burning tokens, or mistakenly sending assets to addresses of other incompatible blockchains.

What is market capitalization?

Market capitalization is the result of multiplying the circulating supply of a certain asset by the asset’s current market value. For Bitcoin, the market capitalization at the beginning of August 2023 is above $570 billion, which is the result of the more than 19 million BTC in circulation multiplied by the Bitcoin price around $29,600.

What is trading volume?

Trading volume refers to the total number of tokens for a specific asset that has been transacted or exchanged between buyers and sellers within set trading hours, for example, 24 hours. It is used to gauge market sentiment, this metric combines all volumes on centralized exchanges and decentralized exchanges. Increasing trading volume often denotes the demand for a certain asset as more people are buying and selling the cryptocurrency.

What is funding rate?

Funding rates are a concept designed to encourage traders to take positions and ensure perpetual contract prices match spot markets. It defines a mechanism by exchanges to ensure that future prices and index prices periodic payments regularly converge. When the funding rate is positive, the price of the perpetual contract is higher than the mark price. This means traders who are bullish and have opened long positions pay traders who are in short positions. On the other hand, a negative funding rate means perpetual prices are below the mark price, and hence traders with short positions pay traders who have opened long positions.

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