A “stablecoin” is branded anything but, adding to jitters in crypto-markets


IS THAT HISSING noise the sound of air coming out of the crypto-bubble? On February 21st bitcoin hit a new high of more than $58,000, after a host of big firms and investors, led by Tesla, signalled that they were beginning to take the cryptocurrency more seriously as an asset class and a means of exchange. By February 23rd, though, the price had tumbled by over a fifth from those giddy heights amid rumours of large-scale liquidation of leveraged bets. Then confidence in the crypto-sphere took another knock, as one of its most closely watched components, Tether, fell foul of American regulators.

Tether is a so-called stablecoin. Its issuer, a company of the same name, has long claimed that Tethers—of which more than 34bn are in circulation—are backed one-to-one by dollars. One purported advantage of such pegging is lower volatility; bitcoin’s price, by contrast, is notoriously erratic. Another is that stablecoins make it easier to move…

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Source: https://www.economist.com/finance-and-economics/2021/02/23/tether-is-fined-by-regulators-in-new-york