Recent Tether Disclosures Answer Some Questions, Raise New Ones

Cryptocurrency investors this week learned more about how Tether shared more information on how it manages its reserves, as its seeks to reassure investors it can safely manage its role as a stablecoin linked to the US dollar.

The third biggest cryptocurrency after BTC and ETH, Tether manages $62.5 billion in reserves which back the peg. Close to half its assets are in traditional CDs and other forms of commercial paper. According to the Wall Street Journal, roughly 93 percent of the notes Tether holds held credit ratings of A-2 or higher, levels suggestive of investment-grade rates.

Should Tether’s efforts soothe investors? The devil is in the details, Ashley Ebersole explained. A financial regulatory attorney with Bryan Cave Leighton Paisner, Ebersole was also an enforcement lawyer with the. Securities and Exchange Commission. He voices concerns with the fact the New York Attorney General’s previous enforcement action showed Tether’s “US Dollar Peg” had not always been supported one-to-one by US dollar reserves.

“If Tether purchasers need to rely on the company’s actions and selection of assets to ensure the coin’s price stability, rather than it’s simply being ensured by holding sufficient dollar reserves, it starts to look more like a security or at least an instrument whose holders should have access to fulsome disclosures in that regard,” Ebersole said. “Such disclosures were mandated by Tether’s settlement with the NY AG, and Tether’s recent reports would appear to indicate the coin is sufficiently backed by a stable asset mix.”

At least the backing’s make-up is now fully disclosed, which allows investors to make more informed decisions, Ebersole concluded.

Ebersole was a member of the SEC’s cross-division working groups, shaping the agency’s policy in the months leading up to what would be the advent of blockchain technology. He was previously an investment banker.

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