Tether (USDT) has received some pretty mixed press recently. Perhaps most notably, the Bitfinex-backed stable coin has been the subject of price manipulation allegations leading some to claim it was used to provide price support to Bitcoin and other digital currencies in the 2017 bull run. Today, however, Tether made the news for all the right reasons, as law firm Freeh, Sporkin & Sullivan confirmed that the controversial crypto does indeed appear to have sufficient US dollar reserves to support its $2.6 billion dollar market cap.
As things stand Tether plays a unique and vital role in the crypto space. With the majority of exchanges offering only crypto-to-crypto trading pairs, users are reliant upon the stability of base currencies in developing their trading strategies. Since its inception in 2014, the stable coin has enabled traders to ride the waves of market volatility and emerge relatively unscathed.
Tether’s business model rests on their holding sufficient dollar reserves to ensure that traders can, if they wish, exchange their USDT for actual fiat USD. But many seasoned traders have for some time expressed concerns about the firm, questioning its transparency and looking for reassurance that their funds are safe in the turbulent world of crypto. Tether’s failure to provide evidence of its reserves following a request from the Commodity Futures Trading Commission (CFTC) in December added further fuel to the fire.
Whilst critics point out that the report does not meet the required conditions of a formal audit, and that the information gathered relates only to one day’s balances, this news will surely go a long way to assuaging those doubts. Markets responded positively today as the price of Bitcoin bounced some 3% and combined market cap crossed $290 billion.