Tether Reveals Reserves May Not Always Be Fully Backed By USD
By Mark Lemon – Cryptocurrency Professional
Best known as the number one Stablecoin and by a sizable share of the market, Tether has revealed details on their site of another controversial move. The Stablecoin is known for its ease to buy cryptocurrency as it is backed 100% by reserves of USD, however this may not be entirely true.
For every one Tether that is issued, the company has reported in the past to reserve one US Dollar in their bank account to back the value of the crypto. This means if a user was to use Tether to buy BTC, then the reserves of Tether would fluctuate via the smart contracts to reach an equilibrium of 1:1.
Tether has been the preferred choice for traders to buy and sell cryptocurrency by providing investors with the ability to make crypto-to-crypto trades using a cryptocurrency based on the value of a Fiat. They have always ensured their coin was completely backed by reserves of USD but have now stated on their site:
“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.
As Tether may include other assets, we could see a change in the preferred stablecoin to buy and sell Bitcoin. There has been fierce competition in the Stablecoin market and news like this could be positive for the upcoming coins and projects.
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