Tether announces strategic investment and launch of XAU1 stablecoin

Tether, the digital asset company behind the USDT stablecoin, announced a strategic investment of $18.75 million in XREX Group and the launch of a new stablecoin, XAU1.

According to the company’s press release, the collaboration aims to improve cross-border business-to-business (B2B) payments and innovate the digital asset industry and “regulatory technology.”

Paolo Ardonio, CEO of Tether commented on the announcement:

“Our collaboration with XREX will spearhead several ground-breaking initiatives, including the launch of a unique new unitized stablecoin by the Unitas Foundation and the facilitation of USDT-based cross-border payments, setting a new standard for financial accessibility and efficiency in the region.”

Related: Tether invests $150M in Jihan Wu’s crypto mining firm Bitdeer

Cross-border payments

Tether’s investment in XREX Group will enable XREX to facilitate regulatory-compliant, USDT-based ( USDT ) cross-border B2B payments. 

The development promises to offer businesses “efficiency and potentially lower costs” when transacting across borders.

Ardoino expressed the significance of the partnership:

“Tether’s strategic investment in XREX Group signifies our unwavering commitment to fostering financial inclusion in the emerging markets”

Related: ‘Yield-bearing stables’ are not money or stablecoins: Agora’s van Eck

Launch of XAU1 stablecoin

In addition to the $18.75 million investment, XREX will launch XAU1 in collaboration with the Unitas Foundation. 

XAU1 is a USD-pegged unitized stablecoin over-reserved with Tether gold (XAUt), which, according to the press release, will provide a stable alternative and hedge against inflation. 

Wayne Huang, CEO of XREX Group, emphasized the importance of the offering, stating:

“With Tether’s strong support and investment, we’re expanding this success into a RegTech product line that further refines XREX Group as a responsible financial institution.”

Related: Binance prepares for MiCA rules, updates stablecoin strategy

How stable are stablecoins?

Despite their design and pegged values, market dynamics, manipulations and fluctuations reveal vulnerabilities to stablecoin stability. 

In light of the upcoming Markets in Crypto-Assets Regulation (MiCA) rules, exchanges like Binance are preparing to transition European users from unauthorized stablecoins to regulated equivalents.

Stablecoin regulatory clarity is required for the future, but determining which stablecoins meet MiCA regulatory requirements remains uncertain. 

Binance’s “sell-only” strategy for unauthorized stablecoins reflects this cautious approach while the regulation overhaul continues.

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