Tether Partnering with Britannia Bank & Trust in the Bahamas
Tether partners with Britannia Bank & Trust in the Bahamas amid scrutiny from US banks. The move allows Tether to facilitate dollar transfer.
Tether, the issuer of the world's most popular stablecoin USDT, has entered into a banking relationship with Britannia Bank & Trust, a privately held bank based in the Bahamas. This partnership comes at a time when Tether is facing increasing scrutiny and challenges in its relationships with U.S.-based banks.
Tether's decision to partner with Britannia Bank & Trust is not entirely surprising. The stablecoin issuer has had a complicated history with traditional financial systems, particularly in the United States. Wells Fargo, for instance, severed its banking services with Tether back in 2017.
The new partnership with Britannia Bank & Trust allows Tether to facilitate dollar transfers, a critical function for any stablecoin issuer. Britannia Bank & Trust, under its parent company Britannia Financial Group, has been expanding its services in the cryptocurrency sector. Last year, the bank acquired Alphaplate Ltd., a proprietary crypto trading firm, signaling its bullish stance on digital assets.
Tether has been a subject of speculation and scrutiny, especially after settling allegations with the New York Attorney General in 2021 over its reserves and undisclosed losses. The stablecoin issuer has not been fully transparent about its banking partnerships.
Patrick Tan, general counsel for ChainArgos, said: "The secrecy surrounding Tether's banking relationships continues to be a major impediment for developing the cryptocurrency industry, deterring regulatory approvals on other matters, and discouraging traditional asset managers with little tolerance for regulatory risk from more active participation in the space."
Reserve and Market Cap
Tether claims to have $86 billion in assets backing its stablecoins. However, the alleged lack of transparency about its banking relationships has raised concerns. Tether recently released a transparency report highlighting a combined surplus of $3 billion in shareholder capital cushion. These reserves are distributed across 15 different blockchain ecosystems.
In Q1 2023, Tether reported a net profit of $1.48 billion, doubling its earnings from the previous quarter. This surge in profits was accompanied by a 20% increase in the circulation of Tether's token. Meanwhile, its main rival, USD Coin (USDC), has struggled.
Tether USDT Circulating Supply and Market Cap
The relationship between cryptocurrency entities and traditional banking systems has been tenuous at best. Regulatory bodies like the Securities and Exchange Commission (SEC) have been putting pressure on banks, leading to the withdrawal of major and midsize banks from the crypto sector. High-profile financial collapses, such as that of FTX, have made banks even more cautious.
Major banking institutions like JP Morgan, Bank of America, and Citigroup are becoming increasingly cautious in engaging with crypto firms, preferring to cater to established players like Coinbase.