It’s awfully quiet over at Tether HQTether has decided to stop reporting what its supply is apparently, and peeps are getting a ‘lil worried.
- Tether’s market cap has fallen by $8bn in the last few days, leading some inquisitive folk to take a look at its ‘Transparency Page’, which gives daily updates on its supply. Turns out, it’s been neglecting that for several days, which is not quelling the nerves of those who want to know how much USDT is actually getting withdrawn.
- It also handed out $7.6bn in redemptions to users after it briefly lost its dollar peg last week. This had left a few peeps on social media trying to work out the math – if Tether only has $4.1bn in its cash reserves, where did the other $3.5bn come from?
- Others think the only way to settle this is through an audit report. On Twitter, CTO Paolo Ardoino hit back at the suggestion, claiming Tether has “all the liquidity to handle big redemptions.” So no audit report just yet, it seems.
Trouble in Tether TownIt wouldn’t be the cryptoverse if people weren’t asking where Tether is getting its money from.
- Tether is getting questioned once again after it handed out $7.6bn in redemptions to users freaking out in the face of last week’s Stablecoin Saga. Honoring its promise to cover its investor’s butts, Tether paid out almost double its cash reserves to allow users to trade USDT for $1 during the brief time it lost its parity.
- The No.1 stablecoin had a hiccup after UST’s collapse last week, briefly losing its dollar peg to trade at $0.95. In the time it took to repeg, Tether offered ‘redemptions’ to those redeeming $100k+ worth of Tether – turns out a lotta people did, and now the rest of us are wondering where they got the money from.
- Tether had only $4.1bn in its cash reserves at the end of 2021, so everyone’s curious about where the $7bn has come from. A lot of Tether’s reserves are made up of other assets like debt and corporate bonds, which is why the peeps at Tether got a slap on the wrist for claiming it was backed fully by US dollars – when, in fact, it’s not.
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Tether wobbles amid the LunacyLeading stablecoin Tether strays from its dollar peg amid Terra’s meltdown and market-wide selling pressure.
- Uh oh. USDT dropped to as low as $0.94 early on Thursday morning. As of writing, Tether has somewhat recovered to $0.98 as it tries to re-peg with the dollar. This marks its lowest stray from a dollar in over 2 years. Let’s just hope people aren’t mistaking it for UST.
- It seems it's not just algorithmic stablecoins that are feeling the heat then. Unlike UST that ran (are we allowed to use past-tense yet?) on an algorithm that artificially controlled supply and demand, Tether is a collateralized stablecoin backed with fiat. Seems like people are scared of anything with ‘stable’ in its name atm, though.
- Investors can still trade USDT for a dollar, though. CTO Paolo Ardoino tweeted that Tether is honoring its redemption plan, letting peeps redeem the tokens at a dollar via its website while the slip plays out. Fingers crossed this doesn’t get outta hand.
Coming to the end of its Tether?Tether is cutting down on its commercial debt as peeps still try to work out how much cash the stablecoin actually has in its reserves.
- Tether is reducing its short-term corporate debt, otherwise known as ‘commercial papers’, on its balance sheets. The crypto firm already reduced its commercial papers last year, from 44% in Q3 to 30% in Q4. This is part of an effort to get its stablecoin fully backed with the fiat it has safely in its pockets.
- The crypto firm got itself in a tight spot in 2019 with the Commodity Futures Trading Commission (CFTC). In a court fight with the CFTC, Tether was fined $41m for ‘making untrue or misleading statements’ that USDT was backed 100% by fiat currencies. Then it got banned from operating as a business in New York. Ouch.
- USDT is the biggest stablecoin in terms of market cap, coming in at around $82bn. If it were to ever lose its dollar peg a la USDN due to reserve issues, the cryptoverse would most likely find a new layer of chaos.
Biden is tethered to more stablecoin regulationThe Biden administration is not moving on its stablecoin position, demanding more regulation for the dollar-backed tokens.
👩⚖️ The House of Biden released its long-awaited stablecoin report and says that as “compelling” as they are, they need to be classified as banks for regulatory purposes.
🙃 Some investors are pleased despite the gruntwork of regulation, because they want a safety net after the recent Squid fiasco. Others think the administration is withholding financial freedom.
🏎 Tether has just been overtaken by Solana (SOLUSD) as the fourth largest crypto by market cap.
Tether faces the musicStablecoin Tether has gotten itself into some hot water with the Commodity Futures Trading Commission (CFTC) and has been fined $41 million for claiming to have enough U.S. dollar cash reserves to cover every tokens it issues.
The CFTC has slapped Tether and cryptocurrency exchange Bitfinex, which controls Tether, with a multimillion dollar fine after the regulator found that the stablecoin falsely claimed that its tokens were fully backed by dollars. Tether, which is the biggest issuer world’s largest issuer of stablecoins, made claims between 2016 and 2019 that it had big enough dollar reserves to back every stablecoin in circulation – which apparently, was only true for just over 25% of the 26 month period. As the cherry on top, Tether mixed its reserved funds with its corporate funds and held some of the reserves in non-cash products. As you can imagine, regulators aren't thrilled – especially in the midst of calls for greater regulation over the crypto market – and the pair have been handed a fine of over $41 million. CFTC Chairman Rostin Behnam said:
This case highlights the expectation of honesty and transparency in the rapidly growing and developing digital assets marketplace.
Tether has issued over $69 billion in the face of soaring demand.
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