Tether launched a new stablecoin pegged to the Mexican Peso Thursday, marking the company’s first foray into Latin America while adding to a roster that already includes USD₮, the world’s largest stablecoin by market capitalization.
Dubbed MXN₮, the stablecoin is pegged 1:1 to the Peso, according to Tether, meaning each MXN₮ token is worth one Peso. It debuted on the Ethereum, Tron and Polygon blockchains.
“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,” Paolo Ardoino, Tether’s chief technology officer, said in a prepared statement. “MXN₮ can minimize volatility for those looking to convert their assets and investments from fiat to digital currencies.”
In announcing the move, Tether pointed to data showing 40% of Mexican companies would like to “adopt blockchain and cryptocurrencies in some form.” Additionally, the “multibillion-dollar flow of remittances into Mexico and the difficulties involved with money transfers, have created a unique opportunity for stablecoin usage and adoption.”
Major fiat-backed stablecoins like USDT, USDC and BUSD are widely used. Tether’s USDT is the largest stablecoin by market capitalization, with $72.6 billion in circulation as of Thursday morning. USD Coin, was the second-largest, with almost $53 billion in circulation.
They have, despite concerns over their backing, generally retained stable pegs. But other, so-called algorithmic stablecoins have proven less reliable than advertised in recent weeks, attracting government scrutiny.
The UST stablecoin, whose peg was guaranteed by a complex self-executing algorithm, rather than actual cash reserves, lost its peg and collapsed in dramatic fashion earlier this month.
USDT also briefly lost its peg during the crash, dropping from $1 to $0.95 on May 12. Unlike UST, USDT is backed by a combination of commercial paper and U.S. Treasury bills, Tether claims.
Tether has faced questions about the veracity of those claims. In 2019, the New York Attorney General’s office alleged Tether misrepresented the degree to which USDT was backed by fiat collateral. The NYAG settled with Tether, ending the investigation.
Last week, Tether reported having decreased its commercial paper holdings in a move meant to highlight “that Tether is fully backed and that the composition of its reserves is strong, conservative, and liquid,” in the words of Ardoino.
Many regulators still treat stablecoins with caution. “[Stablecoins] run risks which could threaten financial stability,” U.S. Secretary of the Treasury Janet Yellen testified in a Senate Banking Committee hearing on May 10, adding that it was “urgent” for Congress to pass new legislation regulating them.
In addition to USD₮ and MXN₮, Tether offers Euro-pegged and offshore Yuan-pegged stablecoins called EUR₮ and CNH₮, respectively.