In a blog post, Tether announced its intent to reduce secured loans to zero during 2023. Along with the announcement, Tether stated that its current secured loans are overcollateralized and covered by extremely liquid assets. The statement follows a claim published on WSJ.com that said Tether’s lending practices placed the stablecoin at risk. Tether quickly countered the claim, but in the current environment, rumors can quickly be accepted as fact.
In the post, Tether said it is a professional and conservatively managed organization and its objective to wind down its lending business is emblematic of this statement. The decision to exit lending is said to be due to Tether’s “unwavering commitment to serve the global audience.”
To quote the blog post:
“We will continue to show Tether’s resilience through the most uncertain times, regardless of the story fabrications and disinformation concocted by Tether Truthers and clickbait headlines from mainstream media that have been consistently wrong about Tether for close to a decade.
First, they questioned Tether’s reserves while propping up competitors as the most ‘trusted’ alternative. They were proven wrong.
Then, they alleged Tether had 70% of its reserves in Evergrande. They were proven wrong again, with the Evergrande crisis unfolding without any material impact to Tether or the crypto industry.
It didn’t stop there.
Next, the critics claimed Tether’s commercial paper reserves were worthless and would never sell. They were wrong yet again, as two months ago Tether eliminated all commercial paper from its reserves.
They then went on to say Tether couldn’t sign with a big accounting firm – except, Tether has! With BDO, a top-5 accounting firm.
Now, as we see the ‘media darlings’ of crypto being exposed one by one for causing incalculable damage to people and the industry, their online allies and mainstream media are again desperately trying to make Tether the story.”
Pointing at FUD, Tether states that it is committed to adapting to the changing environment. It is widely expected that stablecoin legislation will soon emerge from Congress after the first of the year, creating more rigid compliance rules which should drive user confidence. This may mean stablecoin issuers could be regulated more like banks.
While stablecoins have emerged as a vital conduit for the crypto industry, providing an important on/off ramp to various digital assets, to remain relevant, stablecoins need to be viewed as modern-day payment rails, enabling purchases and transfers minus the infraction and cost associated with more traditional payment vehicles. These services must be offered via trusted, and regulated platforms. This will be the next step for all stablecoin issuers.
