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.
Recent updates indicate that as rumors of increasing regulatory scrutiny of stablecoins grow, crypto traders have withdrawn around $10 billion from Tether USDT in the previous two weeks.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. The Terra UST and LUNA cryptocurrency crash fueled the huge outflow. USDT, like many other stablecoins, lost its peg following the collapse of UST. This brought a lot of attention to the 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 support
Previously, Tether said USDT had a dollar-to-one bank account, but later clarified that it uses various assets as collateral, including commercial paper and even digital tokens. This was revealed after reaching an agreement with the authorities in New York.
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.
While the majority of assets in the review are stable, “corporate bonds, funds and precious metals” and “other investments (including digital tokens)” make up around 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 that it has $162 million more in reserves than its tokens, according to fintech analyst Patrick McKenzie. However, due to the negative nature 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.
