Details Emerge on Iran’s XLM-Based Gold-Backed Cryptocurrency

Iran’s new gold-backed cryptocurrency “PayMon” will be technically based on the Stellar Lumens (XLM) network (which is an open-source codebase), and will trade in “special exchange offices.” These details emerged during a Sputnik interview with Hamid Reza Shaabani, founder of Iranian blockchain company ArzDigital.

As CryptoGlobe reported earlier this month, a company called Ghoghnoos (ققنوس - “phoenix” or “gryphon”in Persian) and four national banks are cooperating with Iranian authorities to produce the PayMon system.

The principal aim of PayMon is to provide a way for Iran to trade around US-sponsored sanctions, which have been increasing under Donald Trump’s push to scuttle (and renegotiate) the Obama-era “Iran deal.”

Commenting on the potential fulfilment of gold for tokens, Shaabani said that the “contract with [Ghoghnoos] stipulates that token holders can receive gold, but the details are not clear yet.” He also said that the crypto will be mostly traded by “special exchange offices,” adding that “It's likely that currencies will be traded in major international currency exchange points.”

Golden Ticket

Iran has been seeking to increase its internal mining production of gold and other precious metals such as copper, in the wake of sanctions which partially targeted these items. Gold has been used in past years to get around sanctions, specifically those that predated the Iran Deal. Gold has helped Iran funnel billions of dollars around sanctions, via Turkey and Turkish nationals.

It is little wonder then that the Central Asian country has eventually thawed to the idea of a cryptocurrency, which is capable of transferring value with uncensorable impunity depending on how it is designed.

Iran joins the Venezuelan government among countries to adopt a state-backed crypto, with Russia also playing with the idea - all for the same general purpose of skirting US-backed sanctions.

Also in the realm of centralized, non-public stablecoins, the JPMorgan Chase mega-bank launched its own a few days ago. The coin will not be widely available, with only entities vetted by the bank having access to the private crypto.

Most of Tether is Used on Centralized Exchanges for Arbitrage, Report

  • A new report by blockchain analytics firm Flipside Crypto claims the majority of Tether is used for arbitrage on centralized exchanges.
  • Flipside found that all Tether is filtered through Bitfinex before reaching the market and that no USDT has ever been destroyed. 

A new report by blockchain analytics firm Flipside Crypto claims that most of Tether’s use occurs on centralized exchanges for arbitrage. 

In a post published May 28, Flipside Crypto analyzed Tether’s on-chain activity to find that the majority of USDT is used for exchange-based arbitrage. Flipside compiled a visual chart of Tether’s on-chain activity, showing that all newly minted USDT is filtered through the cryptocurrency exchange Bitfinex before being released to the market. 

The report pointed out the overlap in parent companies between Tether and Bitfinex, which became a primary point of interest for the NY Attorney General’s Office in April 2019. Bitfinex was accused of using $850 million in funds from Tether to cover losses incurred by the sudden seizure of its now-defunct payment processor Crypto Capital.

The report continued, revealing that no USDT had ever been “burned” or removed from the total market supply.

Instead, Flipside argued that Tether’s primary use has been for arbitrage on centralized cryptocurrency exchanges. 

According to the report, 

It’s pretty clear that most of Tether is used on centralized exchanges, namely Huobi (in light grey), Binance (in yellow) and Bitfinex (in green). The constant movement back and forth between users (in red) and these exchanges reflects the fact that Tether is mostly used for arbitrage. Users can easily make a profit by buying from one exchange and selling on another for a higher price.

Flipside continued, explaining that traders are paying higher fees on Tether transactions to send USDT directly between personal wallets, as opposed to processing through exchanges, in order to create faster and more efficient arbitrage. 

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