A few days ago, the global cryptocurrency market had just entered a recovery phase but that didn’t last long as the market is once again overshadowed by the bearish momentum today.
The recent updates state that as rumors of surging regulatory scrutiny for stablecoins continues grows, crypto traders withdrew about $10 billion from Tether USDT in the previous two weeks.
As per the data USDT’s circulating supply has plunged from 11th May’s $84.2 billion to $73.3 billion yesterday, on 23rd May.
On-chain data suggests that traders withdrew $1 billion from Tether on May 20 alone. Terra cryptocurrency UST and LUNA crash fuelled the enormous outflow. USDT, like numerous other stablecoins, lost its peg following the UST meltdown. This attracted a lot of attention towards stablecoin and its stability.
In a recent blog post, Tether claims that the de-pegging of USDT across crypto exchanges does not imply that the peg has been broken; rather, the de-peg demonstrates that the liquidity has gained more demand than that of exchange’s order books.
Tether USDT Claims To Have 1:1 Backing
Previously, Tether had said that USDT has a one-to-one dollar bank account backing, however later clarified that it utilizes various assets as collateral, including commercial paper and even digital tokens. This was disclosed after it reached a settlement with New York authorities.
As part of the settlement, the company must declare its reserves every quarter. According to the most recent attestation report, it has decreased its commercial paper holdings while boosting its holdings of US Treasury notes. The firm also announced that it is currently carrying foreign government debt.
Although the majority of the assets in the review are stable, “corporate bonds, funds, and precious metals” and “other investments (including digital tokens)” account for roughly 11% of the total.
On the whole, as per the reports the firm’s reserves have surpassed the amount that is required to regain the digital tokens that were issued.
Tether’s account, however, reveals it has $162 million more in reserves than its tokens, according to Patrick McKenzie, a fintech analyst. However, due to the negative character of the crypto market, some of its investments, such as those in the Celsius network, are doing poorly.
According to Paolo Ardoino, Tether’s chief technology officer, Tether’s stability has been maintained even through multiple black swan events and many highly volatile market conditions. And adds up saying, even in the darkest days, Tether has never failed to keep up with its recovery request that comes through any of its verified customers.