Tether has announced the launch of MXNT, a new type of a stablecoin backed by Mexico’s national currency, the peso. Initially, MXNT will be available on three main blockchains – Ethereum, Tron, and Polygon, the company said in a blog post.
MXNT follows on from the company’s existing stablecoins USDT, EURT, and CNHT, pegged to the U.S. dollar, Euro, and Chinese Yuan, respectively.
“We have seen a rise in cryptocurrency usage in Latin America over the last year that has made it apparent that we need to expand our offerings,” said Paolo Ardoino, CTO of Tether.
According to Ardoino, “a Peso-pegged stablecoin will provide a store of value for those in the emerging markets and in particular Mexico,” minimizing volatility “for those looking to convert their assets and investments from fiat to digital currencies.”
Tether Launches MXN₮
Tether Tokens Pegged To the Mexican Peso 🇲🇽
Read the full press release ⬇️https://t.co/o732RTxc7T pic.twitter.com/fT1srEgeed
— Tether (@Tether_to) May 26, 2022
Citing reasons for the launch of the MXNT stablecoin, Tether also referred to a report by cryptocurrency payments company Triple A, which says that 40% of Mexican companies are looking to adopt blockchain and cryptocurrencies in some form, with 71% within this segment focused specifically on cryptocurrency usage.
Tether believes this makes Mexico “a prime location for the next Latin American crypto hub.”
“The launch of MXNT will provide a testing ground for onboarding new users in the Latin American market and will pave the way for future fiat-pegged currencies in the region to be launched,” the company said in a statement.
Tether and USDT's reserves
While Tether is seeking to capitalize on the growing interest in cryptocurrencies in Latin America, the company has long been the subject of speculation that its dollar-pegged USDT stablecoin is not fully backed by external assets. In February 2021, Tether settled a long-running lawsuit with the New York Attorney General's office, paying $18.5 million in fines and agreeing to submit quarterly reports about the state of their operation.
Earlier this month, amid market volatility caused by the collapse of Terra's UST algorithmic stablecoin, USDT briefly lost its peg to the greenback.
Following the incident, Tether released its Q1 2022 assurance report last week, which claims that the commercial paper in the USDT reserves fell by 16.8% since the end of 2021.
Commercial paper is a type of security issued by corporations to pay for short-term debt obligations like inventory or payroll.
As of March 31, cash and cash equivalents represented 86% of Tether's $82 billion reserves, with the rest spread out across corporate bonds ($4 billion), secured loans ($3 billion), and $5 billion in other investments like cryptocurrencies, said the report.
Moreover, according to Ardoino, Tether has further reduced its commercial paper holdings by 20%, which will be reflected in the company’s Q2 2022 report.