What is the total issuance of USDT?

Despite criticism surrounding USDT's transparency and reserve management, it remains a popular stablecoin widely used for trading and hedging in the cryptocurrency market.

Jan 30, 2025 at 11:55 pm

Key Points:

• What is Tether (USDT)?
• The Issuance and Management of USDT
• USDT's Role in the Cryptocurrency Market
• USDT's Security and Stability
• Controversies and Criticism Surrounding USDT

Article Content:

What is Tether (USDT)?

Tether (USDT) is a stablecoin, a type of cryptocurrency pegged to a fiat currency, in this case, the US dollar. USDT is designed to maintain a 1:1 ratio to the US dollar, meaning that each USDT token is backed by one US dollar held in reserve.

Tether was launched in 2014 by Tether Holdings Limited, a company registered in the British Virgin Islands. It was initially known as Realcoin and was later rebranded as Tether in 2015.

The Issuance and Management of USDT

Tether tokens are issued by Tether Holdings Limited through a process called "minting." When a user deposits US dollars into a Tether-supported exchange, Tether Holdings mints a corresponding number of USDT tokens onto the Ethereum blockchain.

The US dollars that back USDT are held in reserve by Tether Holdings. The company publishes quarterly attestations to verify the amount of reserves backing the circulating supply of USDT. However, independent audits of these reserves have not been conducted.

USDT's Role in the Cryptocurrency Market

USDT has become one of the most popular and widely used stablecoins in the cryptocurrency market. Its use as a medium of exchange allows traders to quickly and easily convert cryptocurrencies back to a dollar-denominated asset.

USDT is also widely used as a hedge against market volatility. When cryptocurrency prices experience sharp declines, traders can move their funds into USDT to protect their capital from further losses.

USDT's Security and Stability

USDT is backed by Tether's promise to maintain a 1:1 ratio to the US dollar and its reserve of US dollar assets. However, the company has faced criticism regarding the transparency and oversight of its reserve management.

In 2019, Tether settled with the New York Attorney General's Office over allegations that it had misrepresented the backing of its USDT tokens. The company agreed to provide quarterly attestations of its reserves and to refrain from falsely stating that USDT was fully backed by cash.

Controversies and Criticism Surrounding USDT

Tether has been the subject of numerous controversies and criticisms. These include:

• Lack of transparency: Tether Holdings has been criticized for its lack of transparency regarding the management of its reserves. The company has refused to release full audits of its accounts, raising concerns about the stability of the USDT peg.
• Manipulation allegations: USDT has been accused of being used to manipulate the price of Bitcoin and other cryptocurrencies. Tether has denied these allegations, but the use of USDT for wash trading and market manipulation has been documented.
• Potential for insolvency: If the US dollar reserve backing USDT becomes insolvent, the tokens could become worthless. This risk is compounded by the fact that independent audits of Tether's reserves have not been conducted.

FAQs

What is Tether's total issuance?

As of February 2023, the total issuance of USDT is approximately 68.9 billion tokens, with a market capitalization of $68.8 billion.

Is USDT a good investment?

The stability of USDT makes it an appealing investment for those seeking a hedge against market volatility or a stable medium of exchange. However, the controversies and criticisms surrounding Tether raise concerns about the long-term viability of USDT.