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Cryptocurrency News Articles
Tether Slams Deutsche Bank Report, Decrying 'Vague Assertions' about Stablecoins
May 10, 2024 at 10:01 am
Stablecoin giant Tether has criticized Deutsche Bank's report suggesting that stablecoins, including Tether's USDT, may face a "peso moment" that could destabilize the crypto industry. Tether claims the report lacks evidence, is misleading, and questions Deutsche Bank's credibility due to its history of financial penalties.
Deutsche Bank's Stablecoin Report Draws Fire from Tether
New York, May 8, 2023 - Stablecoin behemoth Tether has vehemently denounced a recent report by Deutsche Bank that suggests a potential "peso moment" for stablecoins, including Tether's own dollar-pegged token, USDT. The report sent shockwaves through the cryptocurrency industry, raising concerns about the stability of these digital assets.
Deutsche Bank's Concerns
In its May 7 report, Deutsche Bank analysts drew parallels between dollar-pegged stablecoins and the infamous 2022 collapse of Terraform Lab's algorithmic stablecoin, TerraUSD (UST). They cited the devastating loss of over $40 billion in market value within days as evidence of the inherent fragility of stablecoins.
The report also highlighted a historical analysis of 334 currency pegs over the past 223 years, revealing that nearly half (49%) failed within their median lifespan of approximately eight to ten years. This statistic, coupled with a survey indicating that 42% of European consumers anticipate the failure of stablecoins, led the analysts to conclude that the majority of crypto-backed stablecoins would face significant turbulence due to speculative sentiment, eventually leading to de-pegging events.
Tether's Response
Tether responded swiftly and forcefully to Deutsche Bank's report, dismissing it as "lacking clarity and substantial evidence." A Tether spokesperson asserted that the report relied on "vague assertions rather than rigorous analysis."
"The report fails to provide concrete data to support its claims of an impending decline in stablecoins," the spokesperson stated. "Furthermore, its comparison to Terra, an algorithmic stablecoin, is misleading and irrelevant to the discussion on reserve-backed coins."
Tether also took aim at Deutsche Bank's own credibility, citing the institution's history of hefty fines and penalties. "Questioning the credibility of any financial institution, especially one with Deutsche Bank's track record, seems ironic," the spokesperson remarked.
Transparency Concerns
Deutsche Bank's report raised concerns about Tether's transparency, particularly regarding its reserve composition. While Tether has released several financial attestations attesting to holding over $110 billion in fiat-denominated reserves, critics argue that these attestations fall short of a full financial audit.
Audits involve a thorough examination of data, risks, and compliance issues that may not be readily apparent, while attestations merely provide a snapshot of specific data at a given point in time.
Legal History
Tether has been embroiled in legal battles in the past, including a $18.5 million settlement with the New York Attorney General in 2021 over allegations of misrepresenting the backing of its reserves. Despite these legal challenges, Tether has maintained that it holds sufficient reserves to honor redemptions.
Industry Reaction
Industry experts have expressed mixed reactions to Deutsche Bank's report and Tether's subsequent response. Some analysts have voiced concerns about the potential fragility of stablecoins, while others have defended Tether's reserves and questioned the validity of the report's conclusions.
Cantor Fitzgerald CEO Howard Lutnick has publicly expressed his belief that Tether "has the money" on hand despite the absence of an official audit.
Conclusion
The debate over the stability of stablecoins is likely to continue, with Deutsche Bank's report serving as a wake-up call for the cryptocurrency industry. Tether's forceful response highlights the stakes involved for stablecoin issuers and the importance of transparency and accountability in the rapidly evolving digital asset landscape.
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