Tether Slams Deutsche Bank Over USDT Collapse Prediction

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Stablecoin giant Tether has criticized Deutsche Bank over a recent report suggesting that stablecoins, including its own dollar-pegged token Tether (USDT), could face a “peso moment” that would cause turmoil in the crypto industry.

In a research report on stablecoins released on May 7, Deutsche analysts referenced the 2022 collapse of Terraform Lab’s algorithmic stablecoin TerraUSD (TUSD), which led to a market loss of at least $40 billion in a few days. This event served as the basis for a broader skepticism of dollar-pegged stablecoin products.

Deutsche Bank’s Report on Tether

Analyzing 334 currency pegs over the past 223 years, analysts found that 49% of fixed currencies failed, with a median life span of around eight to ten years. 

They concluded that many pegged assets in the crypto space would face significant challenges due to speculative sentiment, potentially leading to de-pegging events.

Deutsche analysts also highlighted Tether’s lack of transparency regarding its reserves, describing the firm’s solvency status as “questionable.”

Tether Responds

In response, Tether rebuked Deutsche’s report, stating it “lacks clarity and substantial evidence” and relies on “vague assertions rather than rigorous analysis.” 

A Tether spokesperson criticized the report for failing to provide concrete data to support its claims and deemed the comparison to TerraUSD as misleading and irrelevant.

Furthermore, Tether questioned Deutsche Bank’s credibility, citing its history of fines and penalties, which cast doubt on its standing to critique others in the industry.

Transparency Concerns

Tether has faced criticism over the transparency of its reserves. Although the firm has released financial attestations suggesting it holds over $110 billion in fiat-denominated reserves, some argue these attestations don’t equate to a financial audit.

In 2021, the New York Attorney General settled with Tether, imposing an $18.5 million fine and barring it from operating in the state due to alleged misrepresentation of its reserves’ backing.

Money on Hand

Despite never conducting an official audit since its establishment in 2014, Cantor Fitzgerald CEO Howard Lutnick expressed confidence that Tether “has the money” on hand.

The debate over stablecoin transparency and stability continues to be a focal point in the cryptocurrency industry. 

As stablecoins play a crucial role in facilitating crypto trading and providing stability to users, concerns about their resilience and regulatory compliance persist, making transparency and regulatory scrutiny essential aspects for stablecoin issuers to address.

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