Tether, the largest stablecoin in the cryptocurrency ecosystem, recently updated their official website to clarify how their reserves work. The stablecoin had earlier claimed that 1 USDT was backed by 1 USD in reserves, but the claim was quietly changed to the following statement on their official website:
“Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities [collectively, “reserves”]. Every tether is also 1-to-1 pegged to the dollar, so 1 USD₮ is always valued by Tether at 1 USD.”
According to a recent Bloomberg report, the claims that the stablecoin had billions in USD to back up its cryptocurrency was something that was in “invariable doubt” amongst crypto-enthusiasts.
However, the concerns were supposedly “unfounded” upon review of the company’s accounts over four months in 2018. It was reported that Tether essentially had a dollar for every USDT available on the cryptocurrency market.
One of the company statements showed that Tether’s account at Puerto Rico’s Noble Bank Ltd. had $2.2 billion on a particular day, while $2.195 billion Tethers were in existence, according to data compiled by Coinmarketcap.com.
Upon the announcement, a Redditor named vectortrader remarked,
“Was it ever “officially” backed 100% by USD, though? Just because they said that it was, never really meant that it was. And a sketchy one-time “audit” in place of a quarterly audit doesn’t cut in proving their reserves. People in the space would be much better off using something like DAI.”
Subscribe to AMBCrypto’s Newsletter