Tether uses gold to back new synthetic dollar because gold is less volatile than Bitcoin, says Paolo Ardoino

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One of the reasons Tether chose gold to back its new synthetic dollar, aUSDT, is its relative stability compared to Bitcoin, Tether CEO Paolo Ardoino said in a recent interview with Bloomberg.

“Gold is probably the best asset to do this because it is much less volatile than Bitcoin. We accepted Bitcoin, but gold is probably a better choice in the short term,” Ardoino explained.

Introduced in June, aUSDT is over-collateralized by Tether Gold (XAUT) and is part of Tether’s new Alloy by Tether platform, which is intended to create various linked assets.

With the synthetic dollar, Tether seeks to increase trust and transparency within the crypto market. Paolo believes that backing a digital asset with a tangible commodity like gold will instill more confidence in users.

“It’s very, very important for us to research new ways to provide trust to our user base and also demonstrate blockchain-based technology,” Ardoino said. “So until 1971 the US dollar was backed by gold.”

Additionally, there is a demand for alternatives to Tether’s USDT stablecoin, particularly in countries experiencing economic instability, according to Ardoino. He noted that the new currency is meant to provide a more stable and transparent option.

“We also see the opportunity to provide an opportunity for others who want to see more transparent backing of our synthetic dollar,” Ardoino added.

The introduction of USDT came ahead of the upcoming US presidential election, which Tether CEO believes will have a huge impact on the crypto industry.

“I think the election will be very very important for the crypto industry. I saw all the candidates looking at the current state of cryptocurrency support in the US,” he stated.

Commenting on the regulatory environment surrounding crypto businesses in the US, Ardoino pointed out that the country has not always been supportive of cryptocurrency.

“I have to say that the US cryptocurrency industry has not been very well supported to date. We have seen actions against very important companies,” he said.

“We’ve always seen the US as the dominant country when it comes to all innovation… the country that brings all the technological innovation,” Ardoino added. “And it seems odd that the U.S. isn’t seizing the same opportunity to lead one of the world’s most revolutionary technologies.”

Asked whether regulatory reform like Donald Trump’s proposal or implementing safeguards or rules like Kamala Harris’ plan is more important, Ardoino said innovation and government regulation must go hand in hand. He believes that good regulations can create a stable and safe environment for the industry to thrive.

“I think a combination of both is very important. You want to have regulations, good regulations that support these powerful technologies,” Ardoino said.

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