Growing Reservations Surround Tether and its Stablecoin Offerings
In a significant announcement in 2022, Tether, the most valuable stablecoin in the cryptocurrency market, declared its intention to gradually reduce its provision of stablecoin credits against customer collateral to zero by 2024. However, the company continued to extend stablecoin credits, resulting in substantial increases in the credit volume and its market dominance.
Tether generated $5.3 billion in credits for customers, as indicated in its quarterly report released in June. The most recent report revealed a credit amount of $5.5 billion. Concerns have been raised regarding the lack of transparency concerning collateral and borrowers, with allegations that loans were secured with insufficient collateral.
Tether responded to these allegations by defending its collateral practices. Despite these concerns, Tether reported a substantial increase in its reserves and claimed to have an excess of $3.3 billion in equity. The company remains committed to removing collateralized loans from its reserves.