According to Bloomberg, cryptocurrency stablecoin Tether (USDT) has enough fiat dollars to back its tokens in circulation. No doubt, many readers will scorn that this is just another rumor as Tether is synonymous with controversy.
What’s going on?
Tether has Fiat Dollars
The original stablecoin has faced a myriad of controversy since the middle of this year when investors began questioning the validity of its purported 1 for 1 token value.
A stablecoin works by having enough fiat reserves to equal the number of tokens issued. This means that 1 Tether would be equal to 1 dollar. The idea is that it offers a safer form of crypto trading for investors who could cash in their Tether tokens at any given time and be assured that they would receive the exact same amount back in dollars. Stablecoins also act as a safety for trading with other crypto coins.
But Tether faced controversy when investors didn’t believe it had the same dollar amount as it had in its USDT coin.
However, today’s reported suggests otherwise.
Bank Statements
Bloomberg cited “bank statements” it had “reviewed,” and concluded that Tether did, in fact, have a combined fiat bank balance equal to the USDT in circulation. The period in question is between September 2017 to July 2018.
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The report also claims that the company made $6.6 million in interest in the first half of 2018.
Despite its design of being pegged 1:1 with USD, USDT has in fact been fluctuating heavily in recent months. At the time of writing, each Tether is worth $1.01 USD. So its value is over par currently. This reflects the increasing popularity of stablecoins in recent weeks, specifically as Bitcoin and other altcoins have fallen dramatically in value.
The controversy over Tether has been such that the company, along with cryptocurrency exchange Bitfinex, received subpoenas from US authorities at the end of 2017. Last month they added a price manipulation probe.
What do you think about Tether?
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