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Bank Statements Support Tether’s Cash Reserve Claims

Distributed Summary:

  • Bloomberg reviewed a bank statement showing that the stablecoin had $2.2 billion in reserve at time when 2.195 billion USDT tokens were in circulation, effectively pegging each token to one dollar
  • This evidence should quell skepticism that Tether has such robust reserves
  • Gives Tether a huge competitive advantage in the stablecoin race

More concrete evidence supporting Tether’s claim of substantial fiat cash reserves has recently come to light.

Tether is one of the more ambitious stablecoins, promising to keep the value of its tokens, USDT, equal to one U.S. dollar. While this is a shared goal among many stablecoins, Tether is the leader in market capitalization (clocking in at nearly $2 billion, per CoinMarketCap). Currently, the value of circulating tokens is $1.8 billion, while the total number of tokens is estimated to be an astronomical $2.5 billion. Naturally, Tether could only ensure that one token was worth one dollar if it also held a reserve of an equivalent amount of fiat.

With that much money in question, speculation about the viability of the cryptocurrency has been common and reached new heights after some trouble with the auditing process. Tether terminated its relationship with one auditing firm set to perform an audit of its finances, but eventually an unofficial report confirmed the existence of Tether’s cash reserve.

According to documents reviewed by Bloomberg, there are also bank statements that show Tether has an adequate amount of cash on hand to peg its USDT to the dollar. For example, on a day that the total number of USDT tokens was 2.195 billion, Bloomberg discovered a “statement [showing that] $2.2 billion was in Tether’s account at Puerto Rico’s Noble Bank Ltd.”

Tether and the prominent crypto exchange Bitfinex are run by the same executives, according to Bloomberg, and “the bank statements show money flows between the two after Bitfinex became the only way to buy or sell Tether last year.”

Tether’s ability to act on an international scale gives it the status of a kind of “quasi-bank” itself, assuming these reports are accurate.

Additionally, Tether has certainly been acting as if the stores of money it has are legitimate. Recently, Tether announced that it was rolling out a pilot program to convert Tether tokens back into dollars with the lowest amount available for exchange at $100,000. Simply put, these are not the sorts of promises a firm could make if it did not at least have several million dollars on hand.

There now appears to be little reason to doubt that the stockpile of money Tether claims to have backing its cryptocurrency is completely legitimate. If that is the case, then Tether has a good chance to become one of the most successful of all cryptocurrencies, not just the leader in stablecoins.

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