Tether maintained its stability despite the recent $10 billion withdrawals made by the traders
Tether Maintains Stability Despite Withdrawals
As the talk of regulators paying more attention to stablecoins grows, crypto traders have pulled about $10 billion out of USDT over the past two weeks.
CryptoSlate says that the amount of USDT in circulation dropped to $73.3 billion on May 11, from $84.2 billion on May 11.
On-chain data shows that traders took $1 billion out of Tether just on May 20. Terra’s UST and LUNA cryptocurrency crashes helped fuel the huge outflow.
After the UST melted down, USDT and many other stable coins temporarily lost their peg. This made a lot of people interested in this kind of crypto and how “stable” it was.
Traders Growing Doubt
Tether used to say that USDT was backed by a bank account with a balance of one dollar, but now it says that it uses commercial paper and even digital tokens as security. It said this after coming to an agreement with New York officials.
As part of the deal, the company has to report its reserves every three months. According to the most recent attestation report, it has less commercial paper and more US Treasury notes than it did before. The company also said that it owns foreign government debt right now.
Even though most of the assets in the report are stable, “corporate bonds, funds, and precious metals” and “other investments (including digital tokens)” make up about 11 percent of the total.
Overall, the report shows that the company has more money on hand than is needed to buy back the digital tokens it has given out.
A fintech analyst named Patrick McKenzie says that Tether’s account shows that it has $162 million more in reserves than tokens. But because the crypto market is going down, some of its investments, like those in the Celsius network, are not doing well.
Tether has maintained its stability through multiple black swan events and highly volatile market conditions and, even in its darkest days, Tether has never once failed to honour a redemption request from any of its verified customers”
— Paolo Ardoino, Tether’s Chief Technology Officer
