NEW YORK / LONDON (IT BOLTWISE) – Tether, the leading stablecoin provider, is once again in the focus of the financial world. Despite recent concerns about its financial stability, a recent analysis shows that the company has significant reserves that ensure its solvency. Experts emphasize that concerns about Tether’s stability may be overblown as the company continues to generate high profits.
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In the world of cryptocurrencies, Tether is a central player that is constantly in the spotlight. Recent concerns about the financial stability of the stablecoin provider were raised by BitMEX co-founder Arthur Hayes. He warned that Tether could be in serious trouble if the value of its reserve assets declines. But James Butterfill, head of research at CoinShares, contradicted these claims and called the fears unfounded.
Butterfill pointed to Tether’s recent confirmation showing $181 billion in reserves against about $174.45 billion in liabilities, representing a surplus of nearly $6.8 billion. These numbers show that Tether has no systemic vulnerability despite the risks associated with stablecoins. The company remains one of the most profitable in the industry, posting profits of $10 billion in the first three quarters of the year.
The latest concerns about Tether’s financial health appear to have come from Arthur Hayes, who claimed that Tether is in the early stages of a massive interest rate business. He argued that a 30% drop in Tether’s Bitcoin and gold holdings could wipe out their equity and render the USDt stablecoin technically insolvent. These two assets make up a significant portion of Tether’s reserves, with the company increasing its gold holdings in recent years.
In addition to Hayes’ criticism, Tether is also under fire from S&P Global, which has downgraded USDt’s ability to defend its peg to the US dollar. Tether CEO Paolo Ardoino dismissed this downgrade as unfounded fear, uncertainty and doubt, pointing to the company’s third quarter confirmation report. S&P Global cited stability concerns due to exposure to riskier assets such as gold, credit and Bitcoin.
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