In a report by Reuters, Tether (USDT), the stablecoin, has emerged as the “least risky” asset in the crypto sphere. As the banking crisis in the US deepens and regulatory measures tighten around the cryptocurrency industry, investors are shifting their funds towards safer assets, with Tether taking the lead. Furthermore, its market value has sharply risen since March.
USDT’s Steady Value and Growing Trust
The value of USDT, initially pegged 1:1 to a total supply of 85 billion tokens, has consistently remained above 1 since mid-April, reaching 1.002 last week. Anders Kvamme Jensen, the founder of global brokerage firm AKJ, believes one of the reasons for the stablecoin’s value growth is the US banking crisis. Additionally, Conor Rider, an analyst at digital asset data provider Kaiko, notes that Tether’s popularity reflects the increasing trust in dollar-backed tokens.
Other Stablecoins’ Functions and Challenges
However, other popular stablecoins are often considered by investors as means of savings and tools for facilitating cryptocurrency transfers, as well as collateral for derivative transactions. For instance, USD Coin (USDC), Tether’s main competitor, has suffered from the closure of Silicon Valley Bank. Binance USD (BUSD), another major stablecoin, has experienced a decline due to its developers ceasing the issuance of new tokens after regulatory authorities in the US labeled the asset as an unregistered security. Additionally, algorithmic stablecoin DAI has faced difficulties due to its reliance on reserves that include other stablecoins and cryptocurrencies.
Controversies and Challenges Faced by Tether
A few months ago, reports revealed that Tether had opened bank accounts using forged documents and dummy companies. WSJ journalists claimed that one of Tether’s Turkish accounts was used for money laundering by a terrorist organization, involving around $80 million. Furthermore, it was discovered that a group of four individuals with “limited financial experience” managed Tether. In 2018, former plastic surgeon Giancarlo Devasini controlled approximately 43% of the company’s shares and currently serves as Tether’s Chief Financial Officer.