Recent data regarding potential liquidity issues for Tether, the leading stablecoin with a market cap exceeding $157 billion, has analysts sounding alarms.
Identifying the USDT Issuance on Tron
Analyst CHAIN MIND discovered a suspicious issuance of $2 billion worth of USDT recorded in the Tron network classified as 'authorized but not issued.' While these tokens have yet to enter circulation, experts warn Tether may utilize this reserve quickly during major sell-offs. It's crucial to recall past incidents when the New York Attorney General identified misleading reserve ratios by Tether, resulting in an $18.5 million fine.
Pressure from the European Union
The MiCA regulations, effective from July 1, mandate that 60% of stablecoins in circulation be held in European Union banks, along with regular reporting and local supervision. This led to major exchanges like Binance and Kraken gradually removing USDT trading pairs for European users, heightening the necessity for further analysis of Tether's reserve distribution.
Comparing Alternatives
Ongoing issues with reserve auditing remain Tether's Achilles' heel. While the company claims full collateralization, audited balances from independent accounting firms have yet to be released. Alternative stablecoins like USDC, which are regulator-approved in the U.S., may represent safer options for investors. Nonetheless, USDT continues to maintain high trading volumes.
In conclusion, Tether faces challenges stemming from both internal factors and external regulatory pressure, raising questions about the future stability of this stablecoin.
