Strike, the startup building a bitcoin-based payment system in El Salvador, is phasing out its use of Tether’s USDT stablecoin as a U.S. dollar substitute, CEO Jack Mallers said.
“Tether is no longer a part of anything,” Mallers said on an episode of the “What Bitcoin Did” podcast released last week. “Tether was part of the plan originally because it had to be, because I didn’t have a choice.”
Mallers’ remarks – which come less than a month after he introduced El Salvador President Nayib Bukele to the Bitcoin community at a Miami conference – may come as a relief to those concerned about USDT’s backing.
Related: Deputy of El Salvador’s Opposition Party Files Lawsuit Against Bitcoin Legislation
Tether, issuer of USDT, settled a New York State Attorney General probe into its finances in February. Last month, the company disclosed that nearly half of the collateral backing its token is commercial paper, without specifying the issuers or ratings of those debts, leaving the market guessing how creditworthy and liquid the assets were.
Prompting further skepticism, with more than $60 billion of USDT outstanding the breakdown would mean Tether has a $30 billion commercial paper portfolio – bigger than Google’s or Apple’s. According to the company, only 4% of Tether’s reserves are cash and 3% U.S. Treasury bills.
But when Mallers arrived in El Salvador several months ago, his options for building a faster, cheaper remittance system on top of Bitcoin’s Lightning Network were limited, he told podcast host Pete McCormack. (The relevant portion starts at around 23:00 here and ends at 27:00.) This was before Mallers met Bukele, who made international headlines this month when his country became the first to make bitcoin legal tender (alongside the dollar, which has been El Salvador’s currency since 2001).
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