The long-standing debate about the backing of Tether’s USDT tokens has emerged again, after the company made alterations to its terms of service. It now states that the reserves backing USDT comprise of “traditional currency and cash equivalents and … other assets and receivables from loans made by Tether to third parties,” reported Bitcoin news.
Even though Tether dominates the stablecoin market in terms of market share and market capitalization, it is facing increasing competition from newer stablecoin projects. These newer coins have been able to provide evidence of U.S. dollar backing since their launch, reported the publication.
Tether reversed the previous assertion that all the USDT tokens were backed one-to-one with USD reserves, as a part of its terms of service update. The home of the dominating stablecoin now reads,
“Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities.”
The legal page of the company also noted that the composition of the reserves to back the Tether Tokens was within the sole control and discretion of Tether. It further added,
“Tether reserves the right to delay the redemption or withdrawal of Tether Tokens if such delay is necessitated by the illiquidity or unavailability or loss of any Reserves held by Tether to back the Tether Tokens, and Tether reserves the right to redeem Tether Tokens by in-kind redemptions of securities and other assets held in the Reserves.”
On one hand, Tether reversed its claim of backing all outstanding USDT by USD. On the other hand, competing stablecoins have provided regular attestation reports, confirming fiat backing.
Trueusd [TUSD] provided between one and three attestation reports each month, since its launch in March 2018. According to its recent report, the company’s 201,727,658 outstanding TUSD tokens were then backed by $202,621,765 dollars, held in Trueusd’s bank accounts.
According to data provided by Bitcoin news, Circle published its fourth monthly attestation report concerning USD reserve for its USDC token. The report stated that as of January 31, 2019, the outstanding 307,7903,924 USDC tokens were backed by $307,848,312 held in custody accounts.
Paxos, after launching in September 2018, also provided monthly attestation reports. Its recent report, dated 29 February 2019, asserted that 109,543,189.7 PAX tokens were backed by a USD reserve “at least equal to or greater than “$109,543,189.70.”
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