Tether responded positively: USDT has bitcoin in its reserves

  In recent months, the market has been so crazy that it has been numbing. I don't know if you have noticed that, in addition to the market value of all kinds of projects jumping constantly, the market value of the stablecoin sector has also been growing steadily. The total market value of stablecoin now stands at $24.8 billion.

Among them, USDT is the leading one. According to data from Oklink, USDT now has a circulation of $24 billion, accounting for more than 70% of the total market value of stablecoin. Remember in March 2020, USDT was $4 billion.

In less than a year, USDT has increased its offering by a factor of six.

Additional issue at the same time, investors on the USDT still doubt, doubt whether USDT has 100% savings, question whether USDT is manipulating the market, of course, the most worried is whether USDT will thunder.

On the January 10 podcast What Bitcoin Did, Paolo Ardoino, CTO of USDT issuer Tether, and Stuart Hoegner, the company's general counsel, appeared to address all of the concerns, including the lack of reserves, market manipulation, and other rumors that investors care most about.

Rhythm Blockbeats summarizes the conversation's highlights, so let's take a look at Tether's answers.

Q: What is the release process for USDT?

Stuart: There are four steps in this process: generation, issuance, acceptance and destruction.

Generation refers to the generation of USDT on the chain, which requires multi-party cooperation, but before the issuance of USDT, if only generated, this part is not included in the circulating market value.

Issuing a USDT means circulating the USDT in an on-chain ecosystem, sold by Tether to customers, and endorsed entirely by Tether.

Acceptance USDT is when the user returns the USDT to Tether and takes back the fiat currency.

The accepted USDT also remains in Tether's vaults and is either re-issued or destroyed depending on market demand. The generation and destruction of the USDT are managed by multiple tags.

Q: Issuing the USDT should be a simple job?

Stuart:This may seem intuitive and simple to understand, but it is important because, after all, creating a USDT with a private key is not only a theoretical risk, but also a security risk. Paolo has something to say about that.

Paolo:When it comes to security, our approach is to minimize the number of times we need to use the private key. Every time you can see the number of generated USDT are integers, such as the $200 million that, but every time is generated but not issue, because we know the customer, probably can anticipate when there will be a demand, the demand of customer is different, so we'll USDT generated out ahead of time, wait until the customer needs from the generated when we are out of stock of the inside is ok.

Q: Who is using USDT?

Paolo:In 2014, the Bitcoin exchange began to have a market, but the transfer speed of both parties is different. Bitcoin can be transferred after confirmation of several blocks, but fiat currency can be transferred at different speeds. So in order to achieve the same speed on both sides, you have to use the same technology on both sides, so you move the dollars to the chain.

Tether's primary focus is still on the cryptocurrency market, but it has also expanded into more traditional applications such as retail, payments, trade settlement, and international remittances.

Stuart:I like to answer this part, the Tether have very complete AML (anti money laundering) and KYC process (customer), conforms to the American bank secrecy laws, we have the third party audit, we will try my best to be a customer of all, we also often help international law enforcement organization, to help the investigation, tracking and might even freeze the purse.

Q: Why is Tether issued on weekends and holidays, when the bank is not open?

Paolo:The average bank really can't handle business on weekends and holidays.

Tether's main bank is Deltec. Tether itself and many users have opened accounts in Deltec. Meanwhile, Deltec has special staff to handle peer transfer business on weekends and holidays. So even on weekends and holidays, Tether and users can make peer-to-peer transfers and issue USDT. Interbank transfers will still be processed on weekdays.

Q: You were talking about Deltec, so do you have a controlling stake in the bank?

Stuart:We're not talking about our investments here.

Q: OK, so the USDT is 100 percent reserves?

Stuart:In short, yes. Behind each USDT, there must be our reserves, which include traditional currencies, cash and its equivalents, as well as some other assets and loans to third parties.

The loan portion, which includes a commercial loan to Bitfinex, now stands at $550 million. Interest was prepaid this month, and all is well. Each USDT is anchored to 1 USD and can be accepted at any time by Tether. It is impossible to say that it is run on the bank. Nor has there been any breach of acceptance since its establishment. In fact, many Tether users have been using their own examples to prove Tether's ability to accept large sums of money.

With regard to the 74% figure, I would like to make a statement.

In an affidavit filed with the New York Attorney General on April 30, 2020, I mentioned that "Tether's cash and cash equivalents represent approximately 74% of USDT's total circulation."

At the time, the total outstanding market value of USDT was $2.1 billion. Approximately 74% of the reserves are in cash and cash equivalents, with the remaining 26% in loans to Bitfinex. But the point is that 74% refers to cash and its equivalents as a percentage of USDT's reserves at tradable market value. People interpret this as "only 74%", which is not true.

Today, USDT's total circulation has increased to $24 billion, and the ratio of loans to reserves has fallen to about 2.5 percent. USDT is still 100 percent reserve. The Bitfinex loan is also fine right now,

Q: I see. You just said the composition of your reserves. Are there any bitcoins in it?

Stuart: We've made it clear in court last summer that we have bitcoin in our reserves. It's not surprising. There are some transaction fees that have to be paid on Omni, so we have to have bitcoin to pay for that.

As a rule, we do not comment much on the components of our reserves, and we plan to post this information on our website this year.

Q: In that case, someone would say, you can issue a USDT and use the USDT to buy bitcoin as a reserve for the USDT. For example, if you think now is a good time to buy bitcoin, then you will send USDT to buy bitcoin.

Stuart: We don't issue USDT to buy bitcoin for ourselves. We don't. We issue USDT for customers who need USDT.

Q: Is Tether a compliance organization? With which regulatory authorities?

Stuart: Tether is a legally registered MoneyService organization with FinCEN in the United States. It submits routine reports to FinCEN to meet FinCEN compliance requirements.

Tether also filed routine reports with the BVI Financial Investigation Agency to meet FIABVI compliance requirements. In fact, Tether's compliance standards meet or exceed regulatory requirements in each of the following compliance processes (also mentioned above).

Those are the highlights of the conversation compiled by Rhythm Blockbeats.  

In 2020, rhythmically Blockbeats wrote about the USDT and the stablecoin sector.USDT: A peer-to-peer electronic cash system"And"The USDT does not thunderbolt"Two articles, although we can not prove from other channels that USDT must have 100% reserves, but it is undeniable that USDT anchor 1 dollar has become the consensus of all users, while the model of USDT is difficult to make its own run.

In this year, the size of the stablecoin market has multiplied, and the stablecoin market represented by USDT is doing what Bitcoin once wanted to do. It can even be said that the stablecoin market has already moved beyond cryptocurrency, and it is not surprising that USDT and the stablecoin market will continue to be the main event this year.

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