Tether mints an additional 1 billion USDT, CEO claims the tokens are “authorized but not issued”

Tether, the company that created USDT, the world’s largest stablecoin, recently minted another 1 billion units of its cryptocurrency. The minting was reported by Whale Alert, an account on X (formerly Twitter).

However, Tether’s CTO and new CEO, Paolo Ardoino, commented on the move, explaining that the new tokens were authorized but not issued. In other words, the company has prepared them for future issuance, if there is a need to release them into circulation, depending on requests and potential chain swaps, specifically on Ethereum’s network.

Why did Tether mint new tokens?

Tether’s decision to mint additional USDT is not too different from inventory replenishment which is often encountered in traditional finance. Inventory replenishment is a common practice that happens when firms need to stock up on goods and products, especially when they anticipate a surge in demand. However, when they do it, they do not cause surplus inventory.

When it comes to Tether, the creation of additional USDT comes as a result of the same line of thinking. The tokens will remain stored in the firm’s treasury, simply playing the role of reserves. In other words, they will not be immediately released into circulation, so they do not play a part in the token’s total market cap.

Tether’s Transparency page reported that there is a total of $925 million in USDT that was authorized but not issued on Ethereum, which confirms Ardoino’s explanation. It should also be noted that this is not the first time that Tether has done something like this.

The firm conducted a very similar process earlier this year, in September, only those tokens were for the Tron network. Ardoino spoke about the matter at the time, saying that the company had a similar intent for the minted USDT as it does now.

The community is concerned about Tether’s minting practices

While Ardoino’s explanation for the minted tokens is sensible and understandable, the transactions have still raised some eyebrows among industry observers. They appear to be skeptical about the transparency of the company’s practices, which is also understandable, given that Tether spent years refusing to provide insights into its accounts in the past.

Now, some commentators questioned the wisdom in conducting these large mints, suggesting that Tether’s actions might have an impact on the Bitcoin market. However, despite these concerns, Tether has still seen substantial growth in the past 12 months.

The project has seen a 38% increase in market cap compared to January figures. The growth was partially attributed to market excitement regarding the potential approval of Bitcoin spot ETFs in the US, as well as Tether’s growing involvement with Bitcoin-related activities, such as plans to buy BTC for its reserves, as well as launch a Bitcoin mining operation.