Bitcoin lost 2% in a few minutes after shocking revelations from the WSJ: Tether, the issuer of the stablecoin USDT, would be the target of a criminal investigation. The crypto market trembles, but Tether denies it outright. What is behind this affair that could shake the entire ecosystem?
Tether, a giant at the heart of the storm
With a capitalization of more than $120 billion, Tether (USDT) is by far the most used stablecoin on the cryptocurrency market. Its principle: maintain parity with the American dollar, in order to offer a haven of stability to investors. But for years, Tether has been at the center of numerous controversies, with some doubting the reality of its dollar reserves.
According to sources close to the matter cited by the WSJ, the US Department of Justice (DOJ) is currently investigating possible violations of sanctions and anti-money laundering rules by Tether. Information which, if confirmed, could call into question the solidity and legitimacy of this central player in decentralized finance.
The shaken crypto market
For analysts, this brutal reaction reflects investors’ nervousness in the face of regulatory and legal risks weighing on the sector. Many fear that an investigation targeting a player as large as Tether could shake confidence and cause a domino effect.
Tether denies accusations
The WSJ is simply recycling old baseless claims to generate clicks.
Paolo Ardoino, CTO of Tether
But these denials were not enough to reassure the market. For many, the damage is done. This affair serves as a reminder of the fragility of an ecosystem that is still largely deregulated and opaque. And revives fears of a crash comparable to that caused by the fall of Terra/Luna a few months ago.
Towards increased regulation?
For many observers, this affair highlights the urgency of stricter regulation of the cryptocurrency sector. In the United States, several bills are being studied to better regulate stablecoins and prevent systemic risks. In Europe too, regulators are looking into these issues, notably with the MiCA regulation which should come into force by the end of 2024.
But some players in the crypto industry are concerned about excessive regulation that would stifle innovation. They plead for appropriate rules to protect investors without killing the goose that lays the golden eggs. A difficult balance to find, as shown by the Chinese example, where brutal repression has caused an entire ecosystem to flee.
The future of Bitcoin in question
Beyond the Tether case, this affair raises the question of the future of Bitcoin and cryptocurrencies in general. After a mixed year in 2024, many hoped that 2024 would be the year of the big rebound, driven by the growing adoption of large institutional investors. But regulatory headwinds could well dampen this hope.
Already, some are predicting a lasting return below $50,000 if the Tether affair were to be confirmed. Others, more optimistic, see in this phase of turbulence the opportunity for a beneficial purge, eliminating dubious actors to make way for a more mature and responsible ecosystem. One thing is certain: the next few weeks will be decisive in measuring the real impact of this Tether bomb on the crypto market.
