El Salvador’s Bitcoin Mining Industry Sees Tether Join its $1 Billion Venture
After the massive losses that followed the collapse of the crypto exchange FTX, users lost confidence in lending, custody, and cryptocurrency service providers.
The fear of losing assets, as with FTX, plagues people's minds after the commotion.
Some experts believe it will take a while for fear, uncertainty, and doubt (FUD) to clear from people's minds.
It is a critical time for crypto firms as many are experiencing the effects of the FUD caused by the FTX collapse.
Many of them are struggling to gain back customers' trust. In this light, Tether has pledged to stop lending funds from its reserves.
The largest stablecoin issuer reasoned that restoring consumers' faith in the crypto market is critical.
Tether Debunks Rumors of Its Secured Loan Being Risky
In a December 13 press release, Tether addressed the media FUD concerning its secured loans.
Contrary to the circulating rumor, Tether assured that its secured loans are fully-collateralized and backed by "extremely liquid assets."
It also revealed its plans to stop the loan services throughout 2023.
According to the firm, the so-called secured loans operate like private bank loans with collateral.
But in contrast to bank loans that use fractional reserves, Tether said its loans are fully-backed.
Tether's statement could be in response to Wall Street Journal’s claims earlier this month, alleging that the firm’s secured loans are risky.
The journal claimed that Tether might not have enough liquid assets for loan redemption if a crisis occurs.
It wasn't the first attack Tether has received from the Wall Street Journal.
Tether Faces Repeated FUD Attacks From the Wall Street Journal
In August, the media outlet alleged that Tether could be technically insolvent if its assets drop just 0.3%. However, at that time, Tether refuted the statement.
The stablecoin issuer said it hired a top-5 account firm to increase the legitimacy and transparency of its financial attestations.
Following Tether’s attestations, 82% of the firm’s reserves were held in "extremely liquid assets."
In October, Tether removed the commercial paper from its reserves and replaced it with US Treasury Bills in response to more media FUD.
In the latest statement, Tether said it would reduce its lending services without losses and focus on promoting transparency and accountability.
Tether is determined to prove the media wrong through its resilience, transparency, and accountability.
Tether remains the leading stablecoin issuer. According to CoinGeko data, Tether has about 66 billion USDT in circulation and a market share of 46.6%.
The Tether stablecoin is trading at $1 with a 24-hour decline of -0.1% and currently ranking #3 in market capitalization.
Meanwhile, the broader cryptocurrency market seems to be experiencing a price rally. Bitcoin last week set a high record of mining. Bitcoin has gained 2.32% in the last 12 hours and is trading at $17,817.13. Ethereum has gained 3.28% in the past 24 hours and is trading at $1.323.40.