Tether’s Response to Deutsche Bank’s Doubt on Stablecoin

Tether, a prominent stablecoin issuer, has criticized Deutsche Bank over a recently published report that suggests stablecoins, including Tether’s USDT, could experience a catastrophic event similar to the “peso moment,” which would have a negative impact on the crypto industry. The report references the collapse of Terraform Lab’s algorithmic stablecoin TerraUSD (TUSD) in 2022, when the market lost at least $40 billion in a matter of days. Deutsche Bank’s analysts studied 334 currency pegs over the past 223 years and discovered that 49% of fixed currencies failed during their average lifespan of eight to ten years. As a result, the analysts concluded that most pegged assets in the crypto space will face significant volatility and eventually become detached from their peg.

Deutsche Bank analysts also criticized Tether for its lack of transparency regarding its reserves and raised concerns about its solvency status. In response, Tether argued that the report lacked clarity and solid evidence, relying instead on vague assertions rather than rigorous analysis. Tether emphasized that the comparison with Terra, an algorithmic stablecoin, was irrelevant to the discussion about reserve-backed coins. Tether also questioned the credibility of Deutsche Bank due to its history of fines and penalties, suggesting that the bank may not be in a position to critique others in the industry.

Tether has faced criticism in the past regarding the transparency of its reserves. The firm has released several financial attestations indicating that it holds over $110 billion in fiat-denominated reserves. Some critics argue that these attestations are not equivalent to a full financial audit, which examines data, risks, and compliance issues that may not have been previously known. Tether settled with the New York Attorney General in 2021, agreeing to pay an $18.5 million fine and being restricted from operating in the state. The settlement was due to allegations that Tether had misrepresented the extent to which its reserves were backed by fiat collateral.

Despite the lack of an official audit since its establishment in 2014, Cantor Fitzgerald CEO Howard Lutnick expressed confidence that Tether has sufficient funds.

One thought on “Tether’s Response to Deutsche Bank’s Doubt on Stablecoin

  1. As an investor, I trust Tether’s financial attestations. It’s not a full audit, sure, but it’s still evidence of their reserves. Let’s stay positive and hopeful!

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