In the cryptocurrency ecosystem, Tether’s bank has moved to quash recent concerns that USDT is not entirely backed by reserves.
Tether’s Bahamas-based bank Deltec has reaffirmed, as initially stated by Coindesk, that the volume of circulating USDT is entirely backed by reserves. On the famous ‘Unchained’ cryptocurrency podcast this week, deputy CEO Gergory Pepin of the bank discussed resurgent rumors regarding Tether’s reserve policies.
Pepin insisted that balances that are actually larger than the circulated availability of Tether tokens are backed by any USDT token in circulation. The USDT is a stable coin sponsored by the US Dollar at a ratio of 1:1.
Cryptocurrency ecosystem issues derive from a lengthy tradition involving Tether and its reserve strategy. In recent years, the firm has been criticised for failure to carry out an independent analysis of its reserves by outside parties and has been embroiled in a long legal dispute over the flow of funds between Tether and Bitfinex, the cryptocurrency exchange operated by the same parent company, iFinex.
For a long time, Tether maintained that any USDT was backed by dollars, but it was disclosed in 2019 that the company kept only about 74 percent of circulating USDT fiat deposits, while the majority of its reserves were held in cash equivalents and other securities.
Once more massive growth
Tether’s availability has become intrinsically related to the growth of the cryptocurrency markets, and throughout times of heightened trading interest the supply of USDT has also increased. This was done in 2017 when, for the first time once again during the last six months, Bitcoin neared $20,000 as the blockchain markets soared to newfound peaks.
According to Coinmarketcap, the market capitalization of USDT presently stands at about $24bln in size, which places Tether’s token seventh on the global list of cryptocurrencies through their market cap.
In recent weeks, there’s been a good amount of fear-mongering about Tether, but during the podcast, Pepin answered some newly posed questions regarding its reserves. After the bank had announced that it had been buying Bitcoin for some of its other customers, he rubbished reports that Deltec had been buying BTC for Tether.
â€œWe have a very competent and well-respected investment team. And as part of their portfolio education for customers, they actually did an allocation in bitcoin on behalf of those customers,â€Pepin said during the interview.