Myanmar's NUG announces adoption of USDT as official currency

The stablecoin universe is so far dominated by two main tokens, Tether and USD Coin. Tether is already more than 60 percent of the total stablecoins currently issued, worth about $100 billion. [Image: Shutterstock]

Myanmar’s shadow National Unity Government (NUG), in an unprecedented economic move, announced the recognition of stablecoin Tether (USDT) as its official currency.

This comes days after elected leader Aung San Suu Kyi was sentenced to detention by the junta or the military-ruled government on charges of public incitement and flouting Covid-19 protocols.

NUG’s Finance Minister Tin Tun Naing declared the acceptance of tether, also known as dollar proxy, for domestic purposes and ease and speed of trade, services and payments. 

Bloomberg reported that NUG, which consists of supporters and the elected government ministers of the expelled leader, hold no official power post the junta coup by military leaders in September 2021. Notably, the Myanmar government had announced in May 2020 that all digital currencies will be deemed illegal.

Stablecoins are the lesser-volatile counterparts of cryptocurrencies like Bitcoin, SHIB and more, pegged to a relatively stable and consistent asset class like the dollar.

Tether has, for long, been mired in various controversies, owning to the ambiguity that surrounds its digital currency-backing reserves of the dollar. It is essentially considered as a reserve for a particular asset, which in turn, are held as collateral. Simply put, for every 1 USDT, the company will have to compulsorily have $1 in their reserve. 

The same is likely in the case of Tether, which, per their website, claims to be “100% backed by reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables. However, a recent investigation by the Office of Attorney General (OAG), New York had brought to light how Tether had inadequate reserves and had made false statements about these backings. 

A fresh disclosure by Tether holdings had reported holding assets worth $69 billion dollars, of which, $30.6 billion were in commercial paper and certificates of deposit, $7.2 billion were in cash, almost $1 billion in money market funds and $19 billion were held in Treasury bills.

In addition, it also listed $3.5 billion in secured loans to non-affiliated entities, $3.6 billion in corporate bonds, funds and precious metals, and $3.8 billion in other investments that include digital tokens. However, the document failed to clarify the country out of which these funds were based.