Deltec Bank is located in the Bahamas and serves the company Tether Ltd, which issues the stablecoin of the same name. The day before, its representatives said that the USDT cryptocurrency is fully backed by dollar reserves, thereby downplaying general concerns about its legitimacy.
As a reminder, Tether is the largest and most popular stablecoin in the industry – a coin whose value is backed by the US dollar and linked to it. In a way, it is a digital analogue of the real dollar, which is used by cryptocurrency lovers and traders on a daily basis.
For starters, an explanation: Tether has been the subject of heated debate for several years now. There are still skeptics who do not believe that USDT is really “legitimate” and that its value is fairly fixed at the level of one dollar. In the past, numerous scandals related to the Bitfinex cryptocurrency exchange have added fuel to the fire. It is known to be a subsidiary of iFinex Inc., the owner of Tether.
In general, cryptocurrency enthusiasts doubt that all cryptocurrencies are truly backed by dollars. Since the capitalization of USDT is now $ 24.73 billion, this means that this amount in ordinary currency or other equivalent must be in the Tether bank account. Previously, sources reported that the collateral is incomplete, that is, some part of the cryptocurrency is not provided with anything and, in fact, was created out of thin air. However, the current bankers’ report states that stablecoin users have nothing to worry about – at least for now.
What’s happening with Tether
Deltec Deputy CEO Gregory Pepin was a guest on the recent release of the Unchained cryptocurrency podcast. During the broadcast, he hastened to refute all negative comments towards Tether. Here is his line, in which he shares the details of the situation. The quote is from Coindesk.
Each Tether is backed by a foreign exchange reserve, with the reserve itself being larger than the amount of USDT currently in circulation. We see it with our own eyes, so I can confirm it.
USDT capitalization has grown from $ 4 billion to $ 24 billion over the past twelve months. On its website, Tether says that reserves include “traditional currencies and their equivalents and, from time to time, may include other assets as well as receivables from loans provided by Tether to third parties.”
Fears of a shortage of reserves surfaced last week after a post by the author of Crypto Anonymous was posted on Medium.
The publication noted a discrepancy between the amount of USDT issued in the nine months prior to September 2020 and funds held in local banks in the Bahamas. Here is a quote from the article.
All local banks in the Bahamas were running short of dollars to support the Tether coins that circulated in the cryptocurrency market.
However, Pepin denied this claim and stated that Deltec is not an internal bank and does not have an authorized dealer license, which is required to hold Bahamian dollars in cash and deposits. Here is his line.
We cannot accept local customers and cannot store Bahamian dollars. So this report is not really up to date. If the author of the publication took a little effort to delve a little into the specifics of the Bahamian banking market, he would find that the entire mass of local banking institutions have assets of about $ 200 billion. And we are part of that volume.
One way or another, the crypto market is relatively stable so far, that is, possible negative news about Tether had little effect on the price of Bitcoin and the mood of cryptocurrency investors. Gregory Pepin’s statement inspires confidence, so it’s too early to draw conclusions about the imminent negative impact of stablecoin.
We believe that a bank representative can be trusted. It should be understood that such statements concern investors and clients, which means that, if they are not true, they can have serious consequences. Given this, it is easier to believe that Gregory Pepin voiced the correct data than the inability of the representatives of the Tether project to find funds. Still, the cryptocurrency has been on the market for a long time and is the most popular stablecoin in the niche. So the management is clearly doing well.