The issuer of the world’s largest stablecoin, Tether (USDT), plans to take a major step in transparency by announcing the publication of its real-time reserve data starting in 2024, according to a Bloomberg report. The move comes at a time when Tether is under fire and facing investigations regarding the transparency and solvency of its dollar-backed digital currency.
The importance of reserves for Tether
Tether is a stablecoin, meaning it is designed to have its value tied to an underlying asset, usually the US dollar. The company claims that each USDT in circulation is backed by a dollar or equivalent in assets held in its reserves. This allows Tether users to exchange their USDT for dollars at any time, without being subject to exchange rate fluctuations.
The question of reserves is a crucial importance to establish trust and stability of this stablecoin. Nevertheless, Tether has been repeatedly criticized for not holding enough assets for covering all USDT issued and for not providing adequate evidence to support its claims. Moreover, Tether admitted that its reserves are made up not only of dollars, but also of other riskier assetssuch as corporate bonds, loans and cryptocurrencies.
The method of publishing real-time reserve data
According to the transparency page of Tether, the stablecoin issuer publishes and updates its reserves data at least once a day. Tether also publishes monthly reports on reservesin addition to quarterly reserve reviews.
According to the Bloomberg report, Paolo Ardoino, the CTO and future CEO of Tether, said that the company is working on publishing its reserve data in real time from 2024. He added that Tether collaborated with technology partners to establish a system for users and regulators to access information about assets held by Tether at any time. Ardoino also claimed that Tether was in compliance with regulatory requirements and cooperated with relevant authorities.
Mixed reactions to the announcement
The news of Tether releasing real-time reserve data was greeted with caution by the market and experts. Some hailed the move as a step toward greater transparency and accountability:
? Exciting News from #Tether! ? In 2024, they’re stepping up their game:
? Real-time reserve data transparency
? Tech investment for innovation
? Regulatory dialogue for a stronger future
? Expanding into renewable energy#USDT #Bloomberg https://t.co/Eq3A8XOULV pic.twitter.com/EzxzJdgL6l— Collin Brown (@CollinBrownXRP) October 20, 2023
“Exciting news from #Tether! ? In 2024, they improve their offer:
? Real-time reserve data transparency
? Technology investment for innovation
? Regulatory dialogue for a stronger future
? Expansion in the field of renewable energies”
While others have expressed skepticism about the reliability and accuracy of the information provided by Tether:
What will they publish? Made up fraudulent scam numbers on their website? The question is where did the $36b minted usdt for FTX come from? Customer Funds well not enough. Where will tether get that amount? A US Bank does not even have $1B cash L0L There is no FED IN crypto sh1t
— Beartoshi Nakamoto (@BearNakamoto) October 20, 2023
“What are they going to post on their site? Fraudulent figures invented? The question is where the US$36 billion minted for FTX came from. Client funds are not enough. Where will Tether find this amount? A US bank doesn’t even have $1 billion in liquidity L0L”
Conclusion
Tether’s decision to release its real-time reserve data could have a significant impact in the stablecoin market and cryptocurrencies in general. As the world’s largest stablecoin, with a market capitalization of more than $84 billion, Tether plays a central role in transactions and liquidity on cryptocurrency exchange platforms. Many players in the sector also use it as a means of payment, transfer and storage of value.
If Tether can demonstrate that it holds enough assets to support its stablecoin, this could boost its credibility and popularity with users and regulators. It could also encourage other stablecoin issuers to adopt higher standards of transparency and compliance. On the other hand, if Tether fails to publish or justify its real-time reserve data, it could lose market confidence and face sanctions or legal action.
Source: Tether, Bloomberg
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