On June 17, 2024, Tether, the world’s largest cryptocurrency company, officially announced the launch of Alloy by Tether, a revolutionary asset backed by Tether Gold. Alloy by Tether was developed by Moon Gold NA, S.A. de C.V. and Moon Gold El Salvador, S.A. de C.V., both authorized to issue under Salvadoran law.
A brief overview of the project:
1. Token Overview
aUSD₮: A stablecoin pegged to the US dollar, combining fiat and gold-backed token attributes, with each aUSD₮ worth 1 USD.
Collateral: Tether Gold token (XAUt), representing ownership of an ounce of gold.
Participants:
Tether AbT: Licensed entity managing smart contracts and custody services.
Users: Customers completing KYC verification, using XAUt as collateral.
Liquidators: Individuals or companies allowed to purchase XAUt locked in smart contracts at a discount.
2. Issuers
These tokens are issued by Moon Gold El Salvador and Moon Gold NA.
Moon Gold El Salvador, S.A. de C.V.: Registered in the Salvadoran Business Registry, with an office address at Edificio Torre Futura, office 6, level 11, between 87 and 89 avenida norte, Colonia Escalón, San Salvador, El Salvador.
Moon Gold NA, S.A. de C.V.: Also registered in the Salvadoran Business Registry, sharing the same address as Moon Gold El Salvador.
3. Token Backing
aUSD₮ is a stablecoin backed by Tether Gold token (XAUt).
Tether Gold (XAUt): Each token represents ownership of an ounce of fine gold, meeting the London Bullion Market Association (LBMA) “London Good Delivery” standard.
These gold reserves are provided by TG Commodities Limited and held in custody by representatives on behalf of Tether Gold token holders.
Users can search for specific gold bars associated with each on-chain address on TG Commodities Limited’s “lookup website.”
4. Token Features
Collateral: Users can use XAUt as collateral to mint aUSD₮ tokens.
Price Oracle: Used to track the value of XAUt and determine minting and liquidation points for aUSD₮.
Liquidation: If the collateral value falls below the liquidation point, XAUt may be purchased by liquidators to repay aUSD₮.
5. Technology and Standards
Smart Contracts: Based on the Ethereum blockchain’s ERC-20 standard smart contracts.
Technology Stack: Comprising a native blockchain, tokenization system, and business entities in a three-tier architecture.
6. Tax Regime
Tax Exemption: According to Salvadoran law, the nominal value of aUSD₮ and its earnings or income are exempt from any form of taxation.
The flowchart below illustrates the minting and redemption process for aUSDt and Xaut tokens.
Overview of El Salvador’s Digital Assets Act (Stablecoin):
1. Both companies are authorized under El Salvador’s Digital Assets Issuance Act, as detailed in the white paper.
According to Article 22 of the Act, the Relevant Information Document (RID) has been submitted to the National Digital Assets Committee (CNAD) in El Salvador as part of Tether AbT’s application to register as a stablecoin issuer.
Tether AbT has successfully obtained authorization as a stablecoin issuer under El Salvador’s Stablecoin Public Issuance Regulations, Article 5.
El Salvador’s Digital Assets Issuance Act aims to regulate the issuance and management of digital assets to ensure investor protection and market transparency. Article 22 stipulates that all proposed digital asset issuances must submit the Relevant Information Document (RID) to CNAD for review and filing.
2. Relevant Information Document (RID):
Submission Contents: The RID includes detailed information about token issuance such as token functions, purposes, issuance methods, and risk warnings.
Submission Purpose: To ensure regulatory agencies have a comprehensive understanding of token issuance and ensure transparency and legality in the issuance process.
3. National Digital Assets Committee (CNAD):
Organizational Function: CNAD reviews and supervises all digital asset issuances within El Salvador to ensure compliance with relevant laws and regulations.
Audit Process: CNAD audits the RID submitted by Tether AbT, evaluating its legality and compliance.
4. Stablecoin Public Issuance Regulations:
Regulation Background: These regulations specify the issuance requirements and standards for stablecoins to ensure they function as legally circulating digital assets with stable value in the market. Article 5 requires stablecoin issuers to:
Provide detailed token descriptions and functional explanations.
Demonstrate the stability of token value, such as pegging to fiat currency or tangible assets (like gold).
Offer sufficient risk disclosure and investor protection measures.
Ensure transparency in token issuance and management.
However, Aiying reminds potential clients that while the AbT token is registered in the public registry of CNAD, this does not imply endorsement of the token quality or Tether AbT’s solvency. Potential clients should carefully review all information in this document regarding the token and related risks.