Unlike most cryptocurrencies, Tether is a stablecoin pegged to the value of the US dollar.
Regarding market value, Tether is the third largest cryptocurrency.
Some investors and economists are worried tether’s issuer doesn’t have enough dollar reserves to justify its dollar peg.
With more than $60 billion worth of tokens in circulation, Tether has more deposits than most banks.
Boston Fed President, Eric Rosengren, raised the alarm about tether, calling it a potential financial stability risk.
Analysts at JPMorgan have warned that a sudden loss of confidence in tether could result in a “severe liquidity shock to the broader cryptocurrency market.”
Should Tether go down it can harm more than just the cryptocurrency markets. The ripple effect could hit conventional credit markets.
Fewer risks are posed by coins that are fully backed by safe, highly liquid assets, although authorities may still be concerned if the footprint is potentially global or systemic, …
Whereas stablecoins that use fractional reserves or adopt higher-risk asset allocation may face a greater run risk.U.S. credit rating agency