Tether Moves Away From Backing Its Stablecoin with USD as Rivals Move Ahead With Monthly Audits
Tether (USDT) continues generating controversies in the cryptocurrency market. This time, the company behind USDT explained that their USDTs are backed by traditional currency and cash equivalents, and “other assets receivables from loans made by Tether to third parties.”
This is quite important for the market since there are several investors using Tether as a way to hedge against volatility in the crypto space.
Tether Generates More Controversies
Tether seems to be facing competition from other companies that decided to launch their stablecoins to the market. USDT is the largest stablecoin in the space.
Indeed, it is currently the 9th largest digital asset with a market capitalization of $2.03 billion. That means that it is larger than Tron (TRX), Monero (XMR), Bitcoin SV (BSV), MIOTA (IOTA), Dash or Ethereum Classic (ETC).
Users believe that the stablecoin is backed by real USD that are held in a bank account. However, Tether now informs that that they also include cash equivalents and other assets that they receive from loans.
Tether’s official site reads as follows:
“Every tether is always 100% backed by our reserves which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities.”
At the same time, the firm says that they reserve the right to delay the redemption or withdrawal of Tether Tokens if such delay is necessitated by the liquidity of the reserves that Tether holds.
There are other digital assets that have been released to the market as stablecoins and that are now competing against Tether. Some of these stablecoins are USD Coin (USDC), TrueUSD (TUSD), Dai or Gemini USD (GUSD).
TrueUSD has provided between one and three attestation reports per month since it was launched back in March 2018. Cohen & Company is the firm that produced the reports for TUSD. According to the examination performed on February 28, the company has 201,727,658 TrueUSD that are backed by $202,621,765 dollars in different bank accounts.
Circle, for example, has also published its fourth monthly attestation report in which the company shows that they have 307,7903,924 USDC tokens backed by $397,848,312 dollars held in custody accounts.
Another company, Paxos, that has the Paxos Standard Token Stablecoin (PAX), has also released a report in which they inform that the firm has equal or more than $109,543,189.7 on its account.