Tether slams Deutsche Bank over suggestion its Stablecoin could fail
Tether, a major stablecoin issuer, has issued a stern rebuttal to Deutsche Bank’s recent report, which warned of potential risks akin to a “peso moment” for stablecoins, including its USDT token. This term references a scenario that could significantly disrupt the cryptocurrency industry.
Deutsche Bank’s May 7 research on stablecoins highlighted the 2022 collapse of TerraUSD, an algorithmic stablecoin by Terraform Labs, which erased approximately $40 billion from the market swiftly. The report leveraged historical data from 334 currency pegs over the past 223 years, noting a 49% failure rate within their median lifespan of eight to ten years. Analysts from the bank predicted that most crypto-based pegged assets are likely to encounter severe volatility and eventual de-pegging, primarily due to speculative pressures and opaque operations within stablecoin entities.
Particularly, the report casts doubt on Tether’s transparency regarding its reserve holdings and questions the firm’s solvency. However, Tether criticized the bank’s analysis as lacking in clarity and substantial evidence, arguing that it made vague assertions without robust data. Additionally, Tether contested the comparison to algorithmic stablecoins like Terra, claiming it irrelevant when discussing reserve-backed stablecoins.
Tether also highlighted the irony in questioning its credibility, pointing to Deutsche Bank’s own history of fines and regulatory penalties. Despite criticisms of its reserve transparency, Tether has published several financial attestations indicating it possesses over $110 billion in fiat reserves, though these are not equivalent to a full audit. Audits involve comprehensive examinations of data, risks, and compliance, whereas attestations provide a snapshot of specific data sets.
In 2021, Tether agreed to an $18.5 million settlement with the New York Attorney General and was prohibited from operating in the state due to allegations of misrepresenting the backing of its reserves. Despite these controversies, Howard Lutnick, CEO of Cantor Fitzgerald, expressed confidence in Tether’s financial standing, affirming his belief that the firm holds the necessary funds.
