Written by: Aiying

On June 17, 2024, Tether, the world’s largest cryptocurrency company, announced the official launch of Alloy by Tether, a revolutionary anchored 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 subsidiaries of the Tether Group, and both companies are authorized to issue under the laws of El Salvador.

1. Briefly introduce this project

1. Token Overview

  • aUSD₮: A USD-denominated, collateralized stablecoin that combines the properties of a fiat and gold-backed token, with each aUSD₮ worth $1.

  • Collateral asset: Tether Gold token (XAUt), representing ownership of one ounce of gold.

  • Participants:

  • Tether AbT: A licensed entity that manages smart contracts and escrow services.

  • User: Customers who have completed KYC verification and use XAUt as collateral.

  • Liquidator: A KYC verified individual or company that is allowed to purchase XAUt locked in a smart contract at a discount.

2. Issuer

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 Commercial Registry of El Salvador with offices at Edificio Torre Futura, oficina 6, nivel 11, entre 87 y 89 avenida norte, Colonia Escalón, San Salvador, El Salvador.

  • Moon Gold NA, S.A. de C.V.: Also registered in the El Salvador Commercial Registry, with the same address as Moon Gold El Salvador.

3. Token Security

  • aUSD₮ is a stablecoin backed by the Tether Gold token (XAUt).

  • Tether Gold (XAUt): Each token represents ownership of one ounce of fine gold that meets the London Bullion Market Association (LBMA) “London Good Delivery” standard.

  • These gold reserves are provided by TG Commodities Limited and are held by a custodian on behalf of Tether Gold token holders.

  • Users can search for the specific gold bars associated with each on-chain address on TG Commodities Limited’s Lookup Website.

4. Characteristics of Tokens

  • Collateral: Users can use XAUt as collateral to mint aUSD₮ tokens.

  • Price Oracle: Used to track the value of XAUt and determine the minting and liquidation points of aUSD₮.

  • Liquidation: If the collateral value drops below the liquidation point, XAUt may be purchased by liquidators to repay aUSD₮.

5. Technology and standards

  • Smart Contract: ERC-20 standard smart contract based on Ethereum blockchain.

  • Technology stack: includes three-layer architecture including local blockchain, tokenization system and business entity.

6. Taxation system

  • Tax Exemption: Under Salvadoran law, the notional value of aUSD₮ and its gains or income are exempt from any form of taxation.

The following is a flowchart of aUSDt and Xaut tokens from minting to redemption:

II. Overview of El Salvador’s Digital Bill (Stablecoin)

1. From the white paper, we learned that both companies are authorized under El Salvador’s Digital Asset Issuance Law.

  • This document (Relative Information Document, RID) has been submitted to the El Salvador National Digital Asset Commission (CNAD) as part of Tether AbT’s application for registration as a stablecoin issuer, pursuant to Article 22 of the Law.

  • Tether AbT has successfully obtained the stablecoin issuer authorization under Article 5 of the Stablecoin Public Offering Regulations.

  • El Salvador's Digital Asset Issuance Law aims to regulate the issuance and management of digital assets to ensure investor protection and market transparency. Article 22: According to Article 22 of the law, all digital assets to be issued must submit relevant information documents (RID) to the El Salvador National Digital Asset Commission (CNAD) for review and filing.

2. Related information files (RID):

  • Submission content: The relevant information documents include detailed information on the token issuance, such as the function, purpose, issuance method, risk warning, etc.

  • Purpose of submission: To ensure that regulators have a comprehensive understanding of token issuance and that the issuance process is transparent and legal.

3. El Salvador National Digital Asset Commission (CNAD):

  • Institutional functions: CNAD is responsible for reviewing and supervising all digital assets issued in El Salvador to ensure that they comply with relevant laws and regulations.

  • Audit process: CNAD reviews the relevant information documents (RID) submitted by Tether AbT to assess its legality and compliance.

4. Regulations on Public Offering of Stablecoins

Regulation background: The regulations specify the issuance requirements and standards for stablecoins to ensure that they can be legally circulated in the market as a digital asset with stable value. Article 5: According to Article 5 of the "Regulations on the Public Issuance of Stablecoins", stablecoin issuers must meet the following conditions:

  • Provide a detailed token description and functional description.

  • Prove the stability of the token’s value, such as being pegged to a fiat currency or physical asset (such as gold).

  • Provide adequate risk disclosure and investor protection measures.

  • Ensure transparency in token issuance and management.