A few days ago, the global cryptocurrency market had just entered a recovery phase, but that didn’t last long, as today’s bearish momentum again overshadows the market.
The recent updates state that as rumours of surging regulatory scrutiny for stablecoins continue to grow, crypto traders withdrew about $10 billion from Tether USDT in the previous two weeks.
As per the data, USDT’s circulating supply plunged from May 11’s $84.2 billion to $73.3 billion yesterday, on May 23.
There was a suggestion from on-chain data that traders withdrew $1 billion from Tether on May 20 alone. Terra cryptocurrency UST and LUNA crash fuelled the outflow to a great extent. USDT, like numerous other stablecoins, faced losses of its peg following the UST meltdown. It attracted a lot of attention to 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; instead, the de-peg demonstrates that the liquidity has gained more demand when compared with that of exchange’s order books.
Tether USDT Claims To Have 1:1 Backing.
Previously, according to Tether, USDT has a one-to-one dollar bank account backing; however, later clarified that it utilizes various assets as collateral that involve commercial paper and even digital tokens. It was disclosed after it settled with New York authorities.
As part of the settlement, there should be a declaration from the company that its reserves every quarter. According to the most recent attestation report, it has reduced its commercial paper holdings, at the same time boosting its holdings of US Treasury notes. As per the announcement from the firm, 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 required to regain the digital tokens that were issued.
Tether’s account reveals it has $162 million more in reserves when compared with its tokens, according to Patrick McKenzie, a fintech analyst. However, due to the crypto market’s negative character, some of its investments, such as those in the Celsius network, are doing poorly.
According to Paolo Arduino, 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 to saying that Tether has never failed to keep up with its recovery request that comes through any of its verified customers, even in the darkest days.