Alchemy Pay, a leading fiat-crypto payment gateway founded in Singapore in 2017, has partnered with TrueUSD (TUSD), a transparent stablecoin fully backed by the USD. Alchemy Pay connects crypto with traditional fiat currencies, offering solutions such as On & Off Ramp, NFT Checkout, Crypto Card, and Crypto Payments, supporting payments in 173 countries.
This collaboration will offer Alchemy Pay’s On-Ramp solution, making TUSD directly purchasable from Alchemy Pay’s Ramp page. Users from 173 countries can now acquire TUSD using fiat currencies, marking a seamless entry into the TrueUSD ecosystem.
TrueUSD (TUSD) is the first USD pegged stablecoin with live on-chain attestations by independent third-party institutions. It has been listed on over 100 trading platforms and is live on 10+ mainstream public chains, including Ethereum, TRON, Avalanche, BNB Chain, Fantom, and Polygon. TUSD is attested in real-time by The Network Firm LLP, an independent CPA firm, and integrated with Chainlink’s Proof of Reserve to secure minting and ensure transparency and reliability. TUSD was granted statutory status as an authorized digital currency and medium of exchange in the Commonwealth of Dominica on October 7th, 2022.
Alchemy Pay’s Commitment to Crypto Adoption
Alchemy Pay’s network, with over 300 fiat payment channels across 173 countries, is dedicated to simplifying the crypto onboarding experience. The company’s efforts in obtaining licenses to operate payment services in countries like Canada, Indonesia, and Lithuania demonstrate its proficiency in the crypto payment industry.
The Ramp provided by Alchemy Pay integrates effortlessly with platforms such as DeFi protocols, NFT marketplaces, and exchanges. It enables easy crypto purchases using credit and debit cards, mobile wallets, and bank transfers. Additionally, Alchemy Pay’s Ramp offers a user-friendly offboarding experience, supporting transactions to bank accounts in more than 50 fiat currencies through remittance partners.
TrueUSD’s Transparency and Accessibility
TrueUSD is recognized for its 24-hour live on-chain attestation, prioritizing transparency, security, and stability. After integrating with Chainlink, TUSD became the first USD-backed stablecoin to utilize Proof of Reserves for secure minting. It is now natively available on various blockchains, including BNB Chain, Ethereum, TRON, and Avalanche, and has expanded to other public chains.
This integration between TrueUSD and Alchemy Pay may signify a substantial step in fostering greater connectivity between everyday people and the thriving crypto industry. By bridging the gap between fiat and crypto, it opens new avenues for users and contributes to the broader acceptance and utilization of cryptocurrencies.
Alchemy Pay, a leading fiat-crypto payment gateway founded in Singapore in 2017, has partnered with TrueUSD (TUSD), a transparent stablecoin fully backed by the USD. Alchemy Pay connects crypto with traditional fiat currencies, offering solutions such as On & Off Ramp, NFT Checkout, Crypto Card, and Crypto Payments, supporting payments in 173 countries.
This collaboration will offer Alchemy Pay’s On-Ramp solution, making TUSD directly purchasable from Alchemy Pay’s Ramp page. Users from 173 countries can now acquire TUSD using fiat currencies, marking a seamless entry into the TrueUSD ecosystem.
TrueUSD (TUSD) is the first USD pegged stablecoin with live on-chain attestations by independent third-party institutions. It has been listed on over 100 trading platforms and is live on 10+ mainstream public chains, including Ethereum, TRON, Avalanche, BNB Chain, Fantom, and Polygon. TUSD is attested in real-time by The Network Firm LLP, an independent CPA firm, and integrated with Chainlink’s Proof of Reserve to secure minting and ensure transparency and reliability. TUSD was granted statutory status as an authorized digital currency and medium of exchange in the Commonwealth of Dominica on October 7th, 2022.
Alchemy Pay’s Commitment to Crypto Adoption
Alchemy Pay’s network, with over 300 fiat payment channels across 173 countries, is dedicated to simplifying the crypto onboarding experience. The company’s efforts in obtaining licenses to operate payment services in countries like Canada, Indonesia, and Lithuania demonstrate its proficiency in the crypto payment industry.
The Ramp provided by Alchemy Pay integrates effortlessly with platforms such as DeFi protocols, NFT marketplaces, and exchanges. It enables easy crypto purchases using credit and debit cards, mobile wallets, and bank transfers. Additionally, Alchemy Pay’s Ramp offers a user-friendly offboarding experience, supporting transactions to bank accounts in more than 50 fiat currencies through remittance partners.
TrueUSD’s Transparency and Accessibility
TrueUSD is recognized for its 24-hour live on-chain attestation, prioritizing transparency, security, and stability. After integrating with Chainlink, TUSD became the first USD-backed stablecoin to utilize Proof of Reserves for secure minting. It is now natively available on various blockchains, including BNB Chain, Ethereum, TRON, and Avalanche, and has expanded to other public chains.
This integration between TrueUSD and Alchemy Pay may signify a substantial step in fostering greater connectivity between everyday people and the thriving crypto industry. By bridging the gap between fiat and crypto, it opens new avenues for users and contributes to the broader acceptance and utilization of cryptocurrencies.
In June 2023, TrueUSD (TUSD) experienced significant growth and adoption across multiple blockchain ecosystems. With the circulating supply reaching 3,059,838,623 TUSD, backed by dollar reserves of over $3 billion, the stablecoin is gaining more recognition in the crypto markets.
TUSD showed a broad spread across various networks with TRON taking the lead with 2,297,017,674 TUSD, Ethereum trailing behind at 729,591,343 TUSD, and BNB Smart Chain (Native) hosting 30,097,865 TUSD. Avalanche, BNB Beacon Chain, Fantom, Polygon, and several other networks also supported a sizeable amount of TUSD.
TrueUSD’s growing adoption was further evidenced by its integration into different platforms and protocols throughout the month. The Web3 shopping platform, UQUID, adopted TUSD as a payment option on June 5th, providing users with a new method to shop. TUSD was also incorporated into the Megaton Finance on the TON network, broadening its presence in the financial sector.
Binance, the world-renowned crypto exchange, played a significant role in promoting TUSD adoption during June. It initiated a TUSD contract swap on the BNB Smart Chain, and upon its successful completion, launched the 34th phase of new token mining, supporting TUSD mining. Binance’s Auto-Invest platform added TUSD as a payment option, and it supported the swapping of the new native TUSD on the BSC network for TUSDOLD, offering users a seamless conversion process.
Venus recognized the rising importance of TUSD by launching the VIP-129 proposal to support the new native TUSD, and following its approval, the market for the token went live. Additionally, Pancake V3 introduced the TUSD Syrup Pool and Farms, providing users with more opportunities to earn rewards.
TrueUSD’s reach extended to Kraken, another major crypto exchange, which enabled deposits and withdrawals of TUSD on the TRON network by the end of June. Binance further cemented TUSD’s position by launching a zero maker fee promotion for all existing TUSD spot and margin trading pairs and added BCH/TUSD and CFX/TUSD trading pairs to its platform.
Alongside these product developments, TrueUSD made strides in community engagement through various campaigns. Binance C2C and Binance Earn launched time-limited campaigns, offering new users a chance to win up to 175 TUSD. The UquidParty online campaign and PancakeSwap’s TUSDQuiz on Telegram created interactive opportunities for participants to win a share of TUSD prizes.
It’s worth pointing out that, despite TrueUSD’s claim to have launched as the “first USD stablecoin operated by a regulated operator,” it might face certain challenges. TrueUSD’s technology partner, Prime Trust, has been grappling with serious issues. Rumors of insolvency swirled around Prime Trust in early June. This situation escalated on June 22 when the Department of Business and Industry in Nevada issued a cease and desist order against the company. Consequently, Prime Trust abruptly put a stop to all fiat and cryptocurrency deposits and withdrawals.
Nevertheless, TrueUSD denied any impact from the Prime Trust situation. In a recent tweet, the company asserted, ‘Prime Trust has suspended all deposits of fiat and digital assets. However, #TrueUSD (#TUSD) is not affected by this development. We don’t have any exposure to Prime Trust and maintain multiple USD rails for minting and redemption. Rest assured, all your funds with TUSD remain secure.’
In recent updates, the TrueUSD (TUSD) team has announced that they are actively engaged in efforts to resume TUSD minting on Prime Trust. This announcement was made following an unexpected pause in TUSD minting via Prime Trust, an event that took place on June 10.
Displaying their commitment to a seamless user experience, the TUSD team stated on June 13, “We are diligently working towards resuming TUSD minting on Prime Trust. We understand the importance of providing a seamless experience for our users.”
It is important to note that the disruption with Prime Trust has not impacted TUSD minting and redemption services with other banking partnerships. These services continue to operate as per usual, as was clarified by the team in a tweet from June 10.
“TUSD minting and redemption services remain unaffected and will continue to operate as usual,” the TUSD team announced, “We want to assure you that our partnerships with other banking institutions remain intact, allowing for seamless transactions.”
Throughout these developments, the TUSD team has shown a clear commitment to transparency, regularly updating their user base and expressing appreciation for their patience and support. The team has further promised to provide prompt updates as the situation evolves.
“We appreciate the patience and support of our community during this process and will provide updates as soon as new developments occur. Thank you for your trust in TUSD,” they shared on June 13.
Though the temporary pause with Prime Trust operations has introduced some inconvenience, the proactive measures taken by the TUSD team to address and rectify the situation demonstrate their dedication to their users.
The Hong Kong Monetary Authority shared a list of eight questions to seek policy-related recommendations citing five possible regulatory outcomes — no action, opt-in regime, risk-based regime, catch-all regime and blanket ban.
Stablecoin usage lost steam amid the recent crypto market downturn. From peaking at nearly $2 billion on May 19, the daily transaction volume has fallen off its 2021 average by about 60%. The significant drop begs the question about stablecoin activity in the current market environment.
Unsurprisingly, the two cryptocurrencies that remain in a tight race for stablecoin dominance are Tether (USDT) and USD Coin (USDC). However, the market holds a fine distinction between the two, particularly with their corresponding reserve holding.
Credit rating agency Fitch Ratings even warned recently about Tether’s risk triggering a destabilization in short-term credit markets, since its reserves are not all in cash. On the other hand, Fitch cites USDC as an example of a fully backed safe asset since it keeps the United States dollars on a one-to-one basis in custody accounts.
Stablecoin analysis
Still, users flock to Tether for a number of purposes. Data from Covalent reveals that Tether exceeded the total transactions of USDC by at least 500,000. USDT had 2.9 million total transactions from January to June while USDC had 2.4 million. But in terms of dollar volume, USDC beats Tether, $21.4 billion to $19.3 billion, respectively.
Moreover, there are some signs of institutional avoidance of Tether. Rather, institutional users seem to prefer using MakerDAO’s DAI, even though USDT has exceeded DAI’s total number of transactions and total trading volume by a long shot.
Data from Covalent shows that DAI’s average transaction value was $50,000 at its peak in May, which was the highest swap value of all stablecoins. With this record, DAI also outperforms other stablecoins by average swap size, hitting around $10,900. In contrast, Tether seems to be the top choice of smaller retail accounts, with its average transaction value of $6,600.
One more outlier is TerraUSD (UST), another U.S. dollar stablecoin that pales in comparison to Tether and USDC’s volume, but outshines the two, much like DAI, in average transaction value. UST averages $10,660 per swap, denoting the preference of bigger accounts for this stablecoin.
However, UST only ranks fourth among stablecoins by the number of swaps, comprising just 2% of the swaps facilitated by the leader, USDT.
Among the two major stablecoins, Tether outpaces USDC by roughly 500,000 swaps. However, USDC outpaces Tether by average swap size of around 33%, which provides USD Coin an advantage by the total swap value.
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Data also looks into which DEX has the most stablecoin trading volume, and the numbers point to Uniswap. The first half of the year saw Uniswap tower above the number of stablecoin transactions at SushiSwap. In January, Uniswap closed in on 1.4 million daily swaps versus SushiSwap’s roughly 200,000.
Uniswap v2 powers 88% of all stablecoin swaps and still remains an enviable spot for transactions, despite the rollout of Uniswap v3 back in May. It has become evident that Uniswap is more of a go-to for stablecoin liquidity.
With an average transaction volume of several thousand dollars, Ethereum’s ever-growing transaction fees do not seem to be a problem. However, as stablecoins garner mainstream adoption and the average stablecoin transaction volume decreases, users may look to more affordable stablecoin blockchains.
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Stablecoins are a key cog in the cryptocurrency machine. The recent bull market has rekindled a long-simmering debate over whether the biggest such coin is, well, stable.
While bitcoin, ether and altcoins have seen astounding price rallies over the past four months, some of the most important growth has been in the cryptocurrencies known as stablecoins. These blockchain-based assets, usually pegged to the U.S. dollar, are a critical part of cryptocurrency trading activity and have taken in billions from investors who use them on exchanges around the world.
The biggest of them all, tether (USDT), has an eye-popping $25 billion market capitalization. However, tether’s critics charge its lack of transparency in everything from finances to the way its issuing company operates threatens the overall crypto market.
At issue is one of the most fundamental questions hanging over the cryptocurrency markets: Is the price of bitcoin and other cryptocurrencies inflated because the backing of tether may not be as strong as people think it is?
Why the market uses stablecoins
Despite hitting a $1 trillion market capitalization in January, freely floating cryptocurrencies, though more liquid than before, are still quite volatile. For example, for the past five years, bitcoin hasn’t been able to consistently maintain a 30-day volatility below 20% as gold does. This makes claims that bitcoin is “digital gold” a poor fit, which is where stablecoins come in.
Bitcoin (black) versus gold (blue) 30-day volatility the past five years.(Galen Moore/CoinDesk Research)
Source: Coin Metrics, FactSet, CoinDesk Research
Jeremy Allaire, chief executive officer of Circle, part of the CENTRE Consortium (with Coinbase) that manages USD coin (USDC), says cryptocurrency market traders need stablecoins to move quickly given constantly gyrating digital asset prices.
“If you’re active in the markets, you’re going to keep your money in a stablecoin because it’s radically faster, cheaper, better than the legacy banking system,” he told CoinDesk.
Allaire’s USDC is in many ways the sort of transparent enterprise stablecoins promise to be. A top 20 crypto asset, it has almost $5 billion in market capitalization and $2.7 billion in daily trading volume as of press time. Every month, the CENTRE Consortium publishes attestations from accounting firm Grant Thornton LLP to prove the amount of USDC in circulation matches up with the amount of dollars in a bank account, meaning the asset is fully backed by dollars. In accounting-speak, attestations are different from audits. Auditing is defined as an independent examination of data, whereas attestations evaluate and review how true data is.
Growth in USDC’s market capitalization over the past year.
Source: CoinGecko
Just a year ago, USDC’s market capitalization was merely $445 million. It saw a tenfold rise as the crypto markets skyrocketed amid uncertain times.
The tethered kingdom
While USDC is one of the more successful stablecoins, it’s relatively small compared to its most formidable and controversial competitor, one that is dominating the sector. The largest stablecoin – and the third largest cryptocurrency – in the entire digital asset ecosystem is tether (USDT).
In the past year, tether’s market capitalization has risen from $4.2 billion to a whopping $25 billion. In a span of four days in 2020, from March 31 to April 3, its market capitalization jumped by $2.1 billion alone.
“We’re not sure that anyone could have foreseen this level of growth and use cases of tether at the very beginning. We were confident that it was a useful token, but didn’t anticipate quite how useful it could be,” Paolo Ardoino, the chief technology officer of Tether and the cryptocurrency exchange Bitfinex, told CoinDesk
So far in January alone, Tether has plowed $3.8 billion more USDT into the crypto ecosystem.
Growth in USDT’s market capitalization over the past year.
Source: CoinGecko
Tether’s entanglements
It is true that Tether is likely an original. It is a project that started as Realcoin, founded in 2014 by entrepreneurs Brock Pierce, Craig Sellars and Reeve Collins. Nonetheless, many in the industry – and law enforcement – have questioned its legitimacy. Multiple ongoing investigations, including from the U.S. Department of Justice (DOJ) and the New York Attorney General’s office, have dogged the stablecoin company. At the center of the DOJ’s criminal investigation into Tether as an organization is whether or not USDT is used to inflate the cryptocurrency markets.
Tether General Counsel Stuart Hoegner provided this statement to CoinDesk regarding the U.S. investigations: “We work with regulators and law enforcement agencies around the world to help their investigations and help them understand our business. We always want to support law enforcement’s legitimate objectives. With respect to the New York Attorney General’s special proceeding, we believe that our discussions with their office has been constructive and we look forward to continuing the conversation.”
Like USDC, USDT is closely associated with an exchange; USDC is used on Coinbase’s exchange and USDT is utilized on Bitfinex, although both are also used on other exchanges. But the behavior of the two assets on the two exchanges is quite different, according to data analytics firm CryptoQuant.
“Compared to bitcoin, there’s no multiple stablecoin addresses for exchanges,” Ki Young Ju, chief executive officer of CryptoQuant, told CoinDesk. Because of this, Ki’s firm has been able to use data from exchanges to calculate what it calls a “stablecoin ratio.” The calculation is the bitcoin reserves from known hot wallets in U.S. dollar (USD) terms divided by the stablecoin reserve addresses exchanges. The higher the ratio, the higher the selling pressure.
Bitcoin price (orange) with USDC stablecoin ratio (blue) on Coinbase.
Source: CryptoQuant
“The ratio for stablecoins like USDC is like 18%-25%,” depending on the exchange, said Young Ju. “But tether is just 7%, meaning most of the demand didn’t come from exchanges.”
Bitcoin price (orange) with USDT stablecoin ratio (blue) on Bitfinex.
Source: CryptoQuant
So where is the demand coming from? While USDT does have a transparency page on its website showing assets and liabilities, it does not appear to provide a regular attestation from any third party that the amount of USDT in circulation matches a bank account somewhere.
Tether’s backing questioned
John Griffin, a professor at the University of Texas, wrote with Amin Shams, a former student who is now a professor in the Department of Finance at Ohio State University’s Fisher College of Business, the academic peer-reviewed paper “Is Bitcoin Really Un-Tethered?”
The 2018 paper said one entity, demarcated in the paper with a single bitcoin address, exerted a remarkable amount of control over the bitcoin bull market in 2017 by minting tether that was then used to buy bitcoin. “We find that one large player is associated with more than half of the exchange of tether for bitcoin at Bitfinex, suggesting that the distribution of tether into the market is from a large player and not many different investors bringing cash to Bitfinex to purchase tether,” according to the research.
The report added that very little tether is returned to the issuer to be redeemed, suggesting the crypto market is at least somewhat inflated by the USDT used by that address to buy bitcoin during the 2017 bull market time period.
The academic paper by Griffin and Shams points to one bitcoin Bitfinex deposit address, 1LSgEKji3ZoGdvzBgkcJMej74iBd38fySb, having overwhelming influence on the bull market in 2017.
Source: “Is Bitcoin Really Un-Tethered?”
Bitfinex/Tether did not respond to specific inquiries regarding the paper, which was updated in 2019. However, in a blog post they slammed the study.
“We have now reviewed the updated Tether article by John M. Griffin and Amin Shams,” begins a Bitfinex blog post from Nov. 7, 2019. “The purported conclusions reached by the authors are built on a house of cards that suffers from the absence of a complete dataset.”
In response, Griffin and Shams disputed that a complete dataset wasn’t used and said blockchain data is easier to obtain for analysis than most realize. They also said it took them a long time to parse and verify all the data to come to the conclusions they did for peer review and publishing.
“One of the things that our paper found is that tether was being printed unbacked and being used to push up cryptocurrency,” Griffin told CoinDesk. “At the time that we printed our paper Tether rigorously denied that.”
However, Bitfinex’s general counsel, Stuart Hoegner, who also represents Tether, conceded in an affidavit filed in a case brought by the New York Attorney General that at least as of April 2019, Tether assets circulating in the crypto ecosystem were only 74% backed by cash and cash equivalents. The case alleges Bitfinex lost $850 million and subsequently used funds from Tether to secretly cover the shortfall.
When asked by CoinDesk to provide specific information regarding redemptions and issuances, Bitfinex’s Ardoino gave this answer: “Much of the information for which you’re looking is available on public blockchains. The data shows that demand for redemptions is far surpassed by the demand for issuances.”
In 2018, the DOJ’s Criminal Division awarded Griffin’s forensic data analysis firm, Integra FEC, $400,000 for “Tether Investigation,” according to a previous version of the contract’s webpage. On Dec. 27, 2020, the contract was updated to reflect completion before the end of 2021, although there is no longer any reference to Tether on the site.
A screenshot of the Integra FEC contract with the DOJ prior to its completion date change noted “Tether Investigation” in the summary.
Source: GovTribe
Shams, Griffin’s collaborator on the paper, doesn’t have any involvement with Integra FEC and told CoinDesk he has not taken any money for his research. He says the paper was well-received in the academic community but believes, like Griffin, that it should be taken more seriously in the cryptocurrency ecosystem, especially given the rigorous peer-review process.
Shams noted the paper was published in the Journal of Finance, which according to statistics on its official website, has accepted only 4.38% of submissions since 2016. “It’s by far the best finance journal,” he said.
Tether’s surprising defender
An unlikely defender of tether is CEO Allaire. He is one example of a longtime participant in the cryptocurrency community who isn’t convinced tether has undue influence on the crypto market.
“I think what I can say is the academic theory that they have run a giant fraud to create tether out of thin air, to buy bitcoin, to drive up prices, I think that’s complete BS,” Allaire told CoinDesk. “If you want to deploy capital into the markets, you do it through stablecoins and then you go bring those dollars into the markets and you buy things and trade things.”
“In particular in Asia where, you know, these are dollar-denominated markets, they have to use a shadow banking system to do it,” Allaire said. “You can’t connect a bank account in China to Binance or Huobi. So you have to do it through shadow banking and they do it through tether. And so it just represents the aggregate demand. Investors and users in Asia – it’s a huge, huge piece of it.”
When Allaire refers to “shadow banking” he’s talking about a term created back in 2007 by an economist to refer to unregulated or lightly regulated non-bank financial institutions. The problem is, shadow banks are not backed by typical FDIC insurance to protect deposits in the U.S. Also, shadow banks were singled out as nefarious participants in the 2008 financial crisis.
When asked about how Tether helps those without proper banking, Ardoino says the liquidity component of USDT is key to the crypto exchange ecosystem. “Tether allows for a more efficient experience across exchange platforms and in digital token commerce more generally,” Ardoino said. “Tether realized early on the importance of a common asset in the crypto ecosystem that can be used seamlessly across multiple blockchains and communities to access and provide liquidity.”
However, Griffin compares problems with tether to traditional financial markets and highlights a gap the stablecoin still has to bridge.
“Having a stablecoin and using stablecoins in the space is a good idea, but you need to have a stablecoin that undergoes proper auditing and proper monitoring,” Griffin told CoinDesk. “It would be equivalent to saying, ‘Hey, let’s make an [exchange-traded fund] in the U.S. on the Russian ruble,’ and then you got the North Koreans and [Russian President] Putin manipulating the ruble,” he said. “And then you wonder, like, well, ‘I wonder why the ruble went up so much this weekend?’”
‘A partial-reserve stablecoin’
Kevin Lehtiniitty is the chief strategy officer of Prime Trust, a Nevada-based trust company that has worked extensively with stablecoins. The firm, as a financial institution, has developed a “stablecoin as a service” product for the crypto market, providing custody, payments and instructing of the minting and burning of stable tokens for exchange.
“We were the first financial institution to be a stablecoin as a service provider,” Lehtiniitty told CoinDesk. “Basically the exchange is a technology layer on top of the stablecoin.”
Prime Trust has worked with over 38 stablecoin products, the first being the venture capital-backed TrueUSD in 2018. “Now, obviously, 38 stablecoins are not going to win,” said Lehtiniitty. “It’s going to be kind of like a winner or top two or three take all kind of a market.”
Lehtiniitty did not mince words on his thoughts about stablecoins without transparent asset backing, calling tether a “partial reserve stablecoin.” “I think the general market sentiment, at least from our perspective, is that people know that – people just don’t think it’s going to crash when they are doing what they are doing.”
“What are the odds that it’s going to crash in the next few hours that I’m holding?” Lehtiniitty continued. ”And that’s that is the world’s dumbest excuse. But I hear it time and time again from OTC and trading partners, other folks, and it drives me nuts.”
Yet, it likely would take a loss of tether’s peg to the dollar for anyone to even raise any alarm because market forces appear to be keeping prices in line, according to another paper, funded by Ripple, called “What Keeps Stablecoins Stable?” by Richard K. Lyons of University of California, Berkeley and Ganesh Viswanath-Natraj University of Warwick.
That paper argues that traders are helping stabilize prices around the peg. And while tether’s peg to the U.S. dollar hasn’t dipped in quite some time, it has happened before, the paper points out.
USDT’s deviations from the peg.
Source: “What Keeps Stablecoins Stable?”
“A lot of very well capitalized people believe that tether is better off existing than not,” Lehtiniitty said. He pointed to the May 2019 $1 billion LEO token offering Bitfinex conducted as an example. “They were willing to put their money where their mouth was to the tune of a tremendous amount of capital to keep tether propped up,” Lehtiniitty added.
Regulators making moves
In the U.S., the Office of the Comptroller of Currency (OCC) has said this month that federally regulated banks can use stablecoins for payments and other services. Also this month, the U.K. released a paper and request for commentary on the use of stablecoins in finance.
All of this, Lehtiniitty suspects, is to build a framework around stablecoins backed by banking in an effort to weed out possible systemic risks that partial-reserve stablecoins like tether may cause should a peg break.
“The only way tether kind of stops and we then go to fully backed stablecoins is regulatory pressure. And what I mean by that is basically saying banks can deal with fully reserved stablecoins, not with other types of stablecoins,” he said.
In a recent video interview, Gregory Pepin, the deputy CEO of Tether’s bank, Deltec, said, “Every tether is backed by a reserve and their reserve is more than what is in circulation.”
More trouble for Tether as an organization looms on the horizon. A federal criminal trial involving real estate investor Reggie Fowler, who was involved in allegedly providing Tether and Bitfinex with shadow banking at one point, is underway in New York. In the case brought by that state’s attorney general, key documents were supposed to be provided by Bitfinex and Tether by Jan. 15. And the DOJ’s Criminal Division investigation is ongoing with Integra’s contract running until the end of 2021.
Even USDC’s Allaire regards Tether as pretty non-transparent. “They’re very opaque about a lot of things,” he told CoinDesk.
