$1 billion worth of USDT tokens were minted on the Ethereum blockchain on Tuesday, taking advantage of the increasing excitement surrounding the possible approval of a spot Ethereum ETF. The surge in the market was fueled by optimism that the U.S. Securities and Exchange Commission (SEC) would give the green light for trading an Ethereum (ETH) ETF this Thursday.
The minting was initially reported by Whale Alert on Tuesday and was later confirmed by Tether CEO Paolo Ardoino. Ardoino clarified that the newly minted tokens were authorized but not yet issued, indicating that they would be used as inventory for future issuance requests and chain swaps.
This is not the first time Tether has minted tokens in response to speculation about a spot ETF. In January, Tether minted $1 billion USDT tokens when rumors of a spot Bitcoin ETF were circulating. On that day, the price of Ethereum (ETH) fluctuated between $2,204 and $2,294.61.
Ethereum’s value surged by 15% on Tuesday amid the speculation, with other top-performing cryptocurrencies also experiencing significant gains. The increased likelihood of an Ethereum ETF approval, which rose from 25% to 75% after Fidelity updated its filings, contributed to the price of Ethereum reaching $3,726.78.
Some believe that the recent minting of USDT tokens is a strategic move in anticipation of an SEC approval for a spot Ethereum ETF. Ivan Sherbakov, CEO of Cryptorobotics, suggested that the tokens could be used to provide liquidity for market manipulation ahead of ETF news.
The influx of USDT tokens indicates that more funds are expected to enter the crypto market, particularly into ETH and other Ethereum-based coins. These tokens are currently held in Tether’s treasury as “authorized but not issued.” As of May 20, there was approximately $87.8 million worth of such USDT on Ethereum, according to Tether’s Transparency page.
The recent developments come as Deutsche Bank analysts raise concerns about Tether’s lack of transparency. They warn about the potential consequences if the USDT stablecoin were to collapse, given its dominant position in the stablecoin market, which now exceeds $160 billion in total capitalization. Tether’s market cap has surpassed $111 billion, controlling approximately 70% of the stablecoin market.