Tether has gone through countless scandals in the past year, and so far, it has managed to dodge all of them by remaining eerily silent. However, in its latest move Tether appears to have confirmed all the rumors that it’s not 100% backed by fiat as it updates its terms and conditions to say that its reserves “may include assets other than fiat currency.” Tether has been teetering on the edge after claims its reserves aren’t complete started circulating in 2018, and this looks like it could finally be the nail in the coffin for the most popular stablecoin on the planet.
The Sneaky Update
Whoever came up with the idea to simply change the wording at Tether has clearly never heard of the web archives. A copy of the website from February 19 states
every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USD₮ is always equivalent to 1 USD.
Fast forward to the current live site and you will find the following statement:
Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”). Every tether is also 1-to-1 pegged to the dollar, so 1 USD₮ is always valued by Tether at 1 USD,
Update Due to Tron?
Last week Tether partnered with Tron to create a TRC-20 stablecoin on the Tron network. It’s the first stablecoin to hit the Tron network, and Justin Sun could have had a hand in forcing Tether to come clean. If Sun has had any input on the new move from Tether, the crypto community might finally see Sun as a bit of a crypto hero rather than a walking marketing masterclass.
Tether Buckling Under Pressure
For a period of time, Tether paused redemptions while it got its finances under control, but was forced to reopen the redemption service in November 2018. It was staring down the barrel of legal action and thousands of angry investors. Had it refused to reopen redemptions, there would likely have been a myriad of lawsuits and legal action coming its way. Despite its best efforts, this latest working chance could jeopardize all of its efforts.
This move from Tether could very easily be the end of its credibility as the world’s leading stablecoin. Markets are holding steady for the meantime, but it’s only a matter of time before Tether faces a mass redemption event causing the price to tank. If it does indeed hold large portions of its reserves in other cryptocurrencies, we could see Tether caught up in another price manipulation scandal.
