Tether (USDT)–While most of the cryptocurrency world gave a sigh of relief following the release of Tether’s transparency update, justifying that the currency was indeed backed by US Dollar reserves, the actual review itself does not constitute the in-depth audit that most pundits were calling for. Some Redditors have been quick to point out that this attempt at transparency was never billed as an audit, but rather a show of good faith on behalf of Tether to reinstall confidence in the currency and general crypto markets.
Since last October, questions have been raised surrounding the viability of Tether and its close relationship with Bitfinex (the two companies have overlap in ownership). While the artificial creation of USDT without the backing of actual US Dollars is problematic for Tether coin holders, the entire market suffers from the pumping price of nearly 2.7 billion USDT in circulation. If USDT were to be discovered as an empty currency, then Bitfinex and other exchanges are in effect trading worthless coins to users for real BTC, XRP, etc. Just last week, an academic paper was published showing a relationship between the astronomical bull run cryptocurrency experienced last December and the influx of USDT in the market.
Tether’s Step Forward With Transparency
On the other hand, Tether has done a commendable job of extending transparency to investors, even if it lacks the official audit that would have alleviated larger concerns. Some of the troubling language surrounding the nature of the review can be found within the actual FSS Report:
3) FSS makes no representation regarding the sufficiency of the information provided to FSS and all inquiries made by FSS have been directed to the Client and/or third party personnel responsible for maintaining such information, and the data has been obtained from the Client and/or third party personnel responsible for maintaining such information.
Overall, having Tether vetted by a third party, particularly one as high profile as a former FBI Director’s firm, is good news for both Bitcoin and the health of the crypto industry. The bull run at the end of last year, which happened to coincide with billions of USDT pumped into the cryptomarkets through Tether, posed significant risks for the entire market. Should Tether be revealed as a fraud, or at least fudging the amount of US Dollars backing each individual Tether token, it could cause significant ramifications for the industry of crypto, including a near collapse of market prices as we know it.
In an effort to avoid the FUD surrounding Tether and the health of the cryptomarkets, it’s worth reiterating that this release should be seen as a small win for the industry and investor base. However, Tether should still be held on a tight leash in regards to printing USDT tokens, in order to avoid the sort of mess and lack of market confidence that has transpired over the last six months. In addition, it would be beneficial to both Tether and the greater investment base to have an actual, in-depth audit performed on USDT in a way that removes clauses like the above “FSS makes no representation…”
While BTC prices initially responded to the Tether news with a positive pump in value, the market as a whole is down in response to the 30 million USD Bithumb hack. Investors may also be timid over the actual press release of Tether’s transparency update, as outlets range from publishing outright exonerations of Tether to more in-depth looks at the Review.