Tether’s Lack of Fiat Backing Could be Catastrophic for Bitcoin, Analyzing USDT’s Troubling Terms of Service

by Osiris Team


Posted on March 26, 2019, 3:11 p.m.
Analytics
Time to read: 1 min
USDT

Tether, the market-leading stablecoin in both market capitalization and controversy, made changes to its legal terms of service that indicate that USDT is not fully backed one-to-one by US dollar reserves. Instead, the new terms suggest that USDT is backed by other assets including loans made to third parties, calling into question the soundness of Tether’s reserves.

Tether and its associated exchange Bitfinex have been the subjects of immense controversy. Tether underpins billions of dollars worth of value in the cryptocurrency markets through its widely used stablecoin USDT—and if Tether is providing loans, the amount could be even higher.

Yet, despite the importance of Tether in the cryptocurrency markets, the company has refused to undergo audits or clearly disclose its banking relationships. The lack of transparency has companies doubting the company’s claims of USDT’s “one-to-one” backing with US dollars.

These concerns have culminated in the US Department of Justice (DOJ) having launched a criminal probe into the company. Allegedly, the DOJ is focused on potential Bitcoin price manipulation through the use of Tether on Bitfinex.

The company isn’t operating in isolation, either. There is strong competition from other more transparent alternatives. Users may end up voting with their dollars by using USD Coin (USDC), TrueUSD (TUSD), Paxos Standard Token (PAX), or even Dai (DAI) instead of USDT.


Related links:
Source
Like and comment it on:

More cryptocurrency news

Latest news

Wells Fargo pilots a dollar-pegged stablecoin for internal use

US financial giant Wells Fargo is developing a US dollar-linked stablecoin that will run on the firm’s first blockchain platform. The so-called Wells Fargo Digital Cash is planned to facilitate internal cross-border settlements


Adoption Development
All

Sept. 17, 2019, 4:30 p.m.

France will not tax crypto-to-crypto trades

French economy minister Bruno Le Maire has stated that crypto-to-crypto trades will be tax-exempt, according to a report by Bloomberg.


Regulatory
General

Sept. 16, 2019, 3:13 p.m.

France to block development of Facebook’s Libra, says minister

The country’s Minister of the Economy and Finance, Bruno Le Maire, said in new comments that Libra threatens the “monetary sovereignty” of governments


Adoption Development
LIBRA

Sept. 13, 2019, 9:34 a.m.

Binance US plans to begin onboarding customers next week

The largest crypto exchange by volume is making its U.S. debut next week.


Alerts Development
General

Sept. 12, 2019, 12:44 p.m.

Gemini launches custody product with 18 cryptos including Ethereum tokens

The Gemini exchange is launching an institutional-grade crypto custody solution, according to an announcement Tuesday.


Development
All

Sept. 11, 2019, 1:44 p.m.

Follow us