Stablecoins are extremely popular and have become indispensable in the world of cryptocurrencies. They offer an easy way to switch between fiat currencies such as the dollar and crypto. The largest provider of such stablecoins is Tether. Over the past two weeks, Tether has issued a whopping 3 billion in new USDT tokens.
Tether
Public transaction data shows that Tether forged as much as 1 billion new USDT tokens on December 4. In the two weeks prior to this, at least 2 billion USDT tokens were added to the circulation. That means 3 billion USDT tokens have been forged in 2 weeks.
In total, there are now 76 billion USDT tokens in circulation. This makes Tether at least twice the size of USD Coin (USDC), the second largest stablecoin.
Criticism
The value of a USDT token is equal to the value of a single US dollar. To keep this value stable, Tether has a reserve to keep the coverage sufficient.
Originally, the plan would have been to back each USDT token 1-to-1 with US dollars. However, we now know that this is not the case at all. Only 2,9% of Tether’s reserves are dollars. The rest of the reserves consist, among other things, of securities, but the content of these reserves is particularly unclear.
This is causing huge headaches for regulators around the world and crypto investors. The American Securities and Exchange Commission (SEC) regularly speaks quite negatively about the stablecoin sector. The IMF does not have a good word for stablecoins either.
A financial research firm, Hindenburg Research, has even offered a $1 million reward for anyone who comes up with concrete information about Tether’s reserves.
The fact that the amount of tokens in circulation continues to grow, as evidenced by the fact that Tether adds billions to the total supply in a few weeks, may great dangers concerns within the crypto markets, many analysts say.
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