Tether Resumes Lending of USDT Stablecoins
Tether Holdings, the issuer of the popular stablecoin USDT, has restarted its lending program after temporarily halting it. The move aims to provide long-standing customers with liquidity and protect them from selling assets at unfavorable rates. Tether had faced criticism in the past for offering secured loans, as it raised concerns about potential risks and market destabilization due to its dominance in stablecoins.
Increasing Loans and Promises
In its latest quarterly financial statement, Tether reported $5.5 billion in loans, an increase from $5.35 billion in the previous quarter. The company had promised to reduce its secured loans to zero and improve the health of its reserves in response to criticism from the crypto industry. Tether’s loans are typically issued against collateral, mostly other cryptocurrencies.
Potential Risks and Market Impact
The increase in lending by Tether poses a potential risk to the crypto industry. Despite having a market cap of over $83 billion, USDT has struggled to gain trust from the community, leading some investors to switch to other stablecoins. The dominance of USDT in the market also presents a risk, as any unknown event affecting Tether and USDT could have a significant impact on crypto prices.
Tether’s Response and Future Plans
Alex Welch, a spokeswoman for Tether Holdings, stated that these loans will be reduced to zero by 2024. She claims that the loans have helped customers avoid defaulting on existing loans and have increased liquidity. However, Tether’s incomplete financial reports raise concerns about the company’s actual financial health.
Hot Take: Challenges Ahead for Tether and USDT
While Tether continues to lend its stablecoins, the company faces challenges in gaining trust and maintaining stability in the crypto market. With the rising market cap of USDT and its dominance, any issues or uncertainties surrounding Tether and USDT could have far-reaching consequences for the entire cryptocurrency industry. It remains to be seen how Tether will address these concerns and ensure the long-term viability of its stablecoin.
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