The largest issuer of stablecoins in the world, Tether has vowed to end the practice of lending funds from its reserves as it is “mission critical to restore faith” in the cryptocurrency market..
In a December 13 post, The stablecoin issuer addressed recent mainstream media FUD (Fear, Uncertainty, and Doubt) regarding its collateralized loansamong other FUDs that have made it to the “rumor mill”.
Tether reiterated that its collateralized loans are overcollateralized and covered by “extremely liquid assets,” while adding that the company would phase out these loans throughout 2023.stating:
Tether announces starting now, through 2023, that it will reduce collateralized lending in Tether reserves to zero.
Tether’s collateralized loans work similarly to private banks that lend to customers using collateralized collateral, the firm explained.. However, unlike banks that operate on fractional reserves, Tether claimed that its loans are more than 100% backed.
The move is likely in response to a Wall Street Journal report earlier this month that alleged these loans were risky.stating that the “company may not have sufficient liquid assets to pay repayments in a crisis.”
#tether Addresses FUD Around Secured Loans, Reveals Plans to Reduce These to Zero in 2023https://t.co/nZcPr8RiF1
— Tether (@Tether_to) December 13, 2022
Tether addresses the FUD on collateralized lending and reveals its plans to reduce them to zero by 2023. https://t.co/nZcPr8RiF1
It is not the first time that the WSJ has criticized Tether. In August, the outlet said that Tether could be deemed “technically insolvent” if its assets fell just 0.3%. The stablecoin issuer refuted the claims at the time.stating that it had increased the legitimacy and transparency of its attestations by hiring a top-5 accounting firm.
According to these statements, 82% of Tether’s reserves are held in “extremely liquid” assets.
In October, Tether responded to more FUD from the media by removing commercial paper from its reserves and replacing investments with US Treasuries..
In his most recent statement, the company stated that it will liquidate its loan business without loss and continue with its mission of prioritizing transparency and accountability.
“We will continue to show Tether’s resilience through the most uncertain of times, regardless of the fabricated stories and misinformation concocted by Tether Truthers and clickbait headlines from mainstream media who have been consistently wrong about Tether, for nearly a decade. .”
Tether is currently the leading stablecoin issuer; has 65.8 billion USDT in circulation. Its market share is 46.6%according to CoinGecko.
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