Tether’s general counsel, Stuart Hoegner has confirmed that there will be a full audit of the stablecoins operations in months to come. This comes after a lot of criticism and accusations received by the firm that its native token, USDT, is not backed by real US dollars.
In an attempt to put critics at bay, the company plans to have a full audit of its operations. This was announced in an interview on CNBC with Tether CTO, Paolo Ardoino and Hoegner present.
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What Hoegner said about Tether’s audit
Hoegner responded to questions relating to USDT’s backing and transparency stating, “We are working towards getting financial audits, which no one else in the stablecoin sector has done yet. We hope to be the first to do so and it will be coming in months and not years.”
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He reaffirmed that Tether is backed one-to-one with its reserves but also admitted that the reserves were not all US dollars. He stated that the company’s reserves are heavily dollar-weighted but they also include cash equivalents, bonds, secured loans, crypto assets and other investments.
A rival stablecoin company, Paxos, criticized both Tether and Circle in a blog post stating that they are “not comprehensively overseen by any financial regulators.” Paxos said this having revealed that 96% of its stablecoin reserves are cash or cash equivalents.
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What you should know
- Tether is a cryptocurrency stablecoin pegged to the US dollar. The company that operates it, Tether Inc., claims that the coin is backed by U.S dollar reserves, deposited by people who want the coin and it’s redeemable at any time. This means that whenever someone deposits a US dollar to Tether’s account, Tether Inc. will create one Tether coin in return.
- As a result of Tether’s non-compliance to handover documents to help a fraud investigation by the U.S government in New York, many have concluded that its coins are not entirely backed by US dollars and have compared the company to the federal reserve who prints money out of thin air.
- Tether is the biggest stablecoin with a market capitalization of $61.9 billion and the third-largest cryptocurrency asset with only Bitcoin and Ethereum ahead of the coin. It has grown by 195% since the beginning of the year.
- Tether had earlier revealed its USDT backing in May, following increased scrutiny from U.S. lawmakers. The firm has been submitting periodic reports regarding its reserves since settling with the New York Attorney General’s Office in February, but this is not enough to keep critics at bay. The coin is still paired 1:1 to the U.S Dollar.
