Tether Defends Stablecoins, Criticizes Deutsche Bank's Destabilization Report
Summary:
Tether has criticized a report by Deutsche Bank that suggests stablecoins like its own dollar-pegged token could destabilize the crypto industry. The report compared Tether to the 2022 collapse of TerraUSD, drawing on historical analysis of currency pegs failing within their average lifespan. Tether labeled the report as lacking substantial evidence, questioning the credibility of Deutsche Bank and highlighting its own $110 billion in fiat-linked reserves. Despite past criticism and fines, Tether remains confident in its financial capabilities.
Following the release of a new report by Deutsche Bank, Tether, the renowned stablecoin company, has openly criticized the assumption of stablecoins, including its own USDT, facing a possible destabilizing event which could unbalance the digital currency industry. The document, released on May 7th, pointed towards the downfall of Terraform Lab's TerraUSD (TUSD) in 2022 which resulted in a market loss of roughly $40 billion in a few days, utilizing this event as a part of the critique against stable digital currencies that are tied to the dollar.
The report draws on a historical analysis of 334 currency pegs from the past 223 years, illustrating that about 49% have failed within their average lifespan of eight to ten years. An interesting finding was also that 42% of European consumers believed a downfall for stablecoins was imminent. The summary of the report was that a majority of crypto bonds were forecasted to face notable market fluctuations, eventually resulting in some sort of deviation from their pegged assets due to speculative sentiment. There was a particular emphasis on prevalent shortcomings such as the opaque operations within stablecoin and its susceptibility to market speculation.
The Deutsche Bank analysts drew attention to Tether's own elusive conduct concerning its reserve data and relayed doubts over its solvency. On the other hand, Tether responded sharply to the accusations levied by Deutsche’s report, labeling it as lacking substantial evidence and clear reasoning.
A representative of Tether shared with Cointelegraph, that the report, while alleging a future downfall for stablecoins, failed to offer tangible data supporting its arguments. Tether further objected to the comparisons made between it and Terra, terming this as irrelevant and misleading when discussing reserve-backed coins. Tether also questioned the credibility of Deutsche Bank who themselves have faced numerous fines and penalties.
Tether has faced previous accusations over its reserve transparency and in response, it has published several financial attestations, indicating that it holds over $110 billion in fiat-linked reserves, although some remain skeptical stating that a financial attestation isn't equivalent to an audit. In 2021, Tether was penalized $18.5 million by the New York Attorney General and was prohibited from operating in the state for allegedly misrepresenting the extent of backing by its reserves. Despite this, Cantor Fitzgerald's CEO, Howard Lutnick, still maintains his belief in Tether's financial capabilities.
Published At
5/10/2024 4:58:03 AM
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