Tether, the largest stablecoin by market cap, has revealed new details regarding its collateral model. Until recently, Tether has claimed that its $2 billion token supply is backed by a reserve of real US Dollars. Now, it seems that other assets are also being used to back the coin. Tether’s website now states:

“Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”).”

Sufficiency of Reserves

Tether has two duties as a stablecoin: to maintain price parity with the US Dollar, and to prove that it is backed by an actual reserve of US Dollars. But for the past few years, Tether’s ability to accomplish those things has been called into question due to the company’s unsatisfactory audit practices.

As such, the revelation that loans partially account for Tether’s value is worrying. Many already…

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Source: https://thebitcoinnews.com/tether-reveals-that-its-reserves-arent-what-they-seem/