Changes to Tether's Terms of Reserves Raises Fresh Concerns

Published on by Cointele | Published on

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Controversial stablecoin Tether is in the spotlight again after changes to the details of the way in which it backs up tokens in supply.

As reported on March 14, various online users noted and posted disconcerting changes to the Tether website, which have seemingly altered the way that the company is providing surety for the tokens it issues.

"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."

"I can only speculate, but based on USDT currently trading almost at par with USD, I would venture a guess that at this moment Tether does have adequate cash reserves to survive a"run on the bank.

"I do believe Tether has 100% of reserves for issued tokens. But again, that's not the problem, the problem is the quality of these reserves. Are they made of 50% Treasury-Bills, 30% bank certificate of deposits, and 20% receivables? Or is it 99% Treasury-Bills? We don't know, and therein lies the problem. It's the quality of reserves, not the quantity."

"Tethers remain completely stable and 100% backed, so Tether's reserves always equal or exceed the number of issued Tethers. Moreover, our reserves are posted in real time on Tether.to."

"Tether's reserves remain, and have always been, 100% backed by its reserves. Tether maintains the ability to honour all redemption requests."

"There's no way to confirm it without an audited financial statement from a reputable firm. We can only speculate. What I can say is that the updated terms of service opens the possibility for that to happen. From now onwards, Tether can issue tokens on credit and the"outstanding receivable" may serve as reserves for issued tokens.

Ulrich also brings up an interesting point regarding the major holders of USDT and what situations could test the liquidity of Tether and its reserves.

Tether trudges onwardDespite the fresh controversy surrounding Tether, the company is forging ahead with efforts to increase the availability of Tether tokens to more players in the cryptocurrency space.

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