While Bitcoin's lack of a stable pricing mechanism has prevented it from becoming a commonly accepted medium of exchange, Tether - one of the earliest stablecoins, developed by Tether Ltd. - has addressed this.
In 2014, Tether Ltd. issued its namesake stablecoin, Tether.
As the earliest U.S. dollar-backed stablecoin, Tether has claimed that each unit of USDT is 100% backed by its dollar reserves.
Recently, Tether has come under intense scrutiny from traditional financial institutions and regulators that believe it could threaten the U.S. dollar's hegemony due to accelerating mass adoption of USDT for cross-border remittance, payment and settlement, foreign exchange, and payroll.
As a distributed network, Tether operates outside the purview of the U.S. banking system and centralized monetary policy.
As its penetration increases, authorities are increasingly viewing Tether as a threat to the dollar's hegemony.
As an audit-resistant form of currency, Tether disrupts U.S. control over dollar circulation while weakening the Fed's monetary policy influence.
As Tether's network is unaffected by the Fed's tightening and easing policy of the dollar, it also represents a threat to U.S. influence vis-a-vis dollar hegemony.
Users of Tether are either unable to or unwilling to access U.S. dollar services through compliant financial channels.
Although Tether can mitigate U.S. monetary intervention, its presence in underserved markets may negatively impact national sovereignty and financial stability.
Tether: Challenging the USD's Hegemony, Championing CBDC and Beyond
Published on Jun 30, 2020
by Cointele | Published on Coinage
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