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π Stablecoin Crisis: Should You Save in USDT?
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π Organizational problems in the crypto market caused an increase in demand for stable tokens: users actively diverted capital into BTC, ETH and
USDT. As a result, the share of
USDT in the stablecoin market exceeded 60%, and capitalization jumped to $80 billion. But this tactic has its traps and pitfalls.
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In November, the market faced the collapse of FTX, and now the US regulators have taken Binance seriously. According to The Block, on March 27-28 alone, cryptocurrencies worth $2.2 billion were withdrawn from the crypto exchange.
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The market has dramatically lost confidence in USDC, the most reliable stablecoin in terms of regulation and reserves. The emergency measures of the US government to save SVB customers, in which Circle (USDC issuer) held part of the reserves, break the stablecoin's rigid connection with USD β on March 11, the exchange rate fell by 10% at the moment.
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Tether also relies on the services of banks to hold reserves, but, unlike Circle, does not disclose information about partner banks. This makes even a rough estimate of bankruptcy risk difficult. At the same time, the
USDT standard user agreement states that the company is not responsible for losses in situations of a liquidity crisis.
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Tether management also expects new claims from supervisory authorities. Last year, an American judge requested financial statements for the past five years in connection with an investigation into the oversupply of
USDT for Bitcoin pumps in 2017.
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The Β«qualityΒ» of Tether reserves is questionable, some of which are commercial loans (and other forms of obligations) issued in
USDT to third parties. In the event of a sharp outflow of funds, the company risks facing a liquidity crisis, and may also lose its connection with the USD. So long-term storage of money in cold
USDT wallets should be treated with caution.
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Have you already found a comfortable haven for your capital?
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Profits to yβall!