Concerns Regarding Stablecoin Reserve Transparency
Concerns about the lack of transparency surrounding the proof of reserves for stablecoins have grown. There are still questions regarding the stability of the stablecoin, despite the firm that created it making an attempt to strengthen the auditing procedure and the assets it uses to back the cryptocurrency.
Portfolio of Tether Bonds and Cantor Fitzgerald
The large $39 billion bond portfolio that Cantor Fitzgerald, a Wall Street financial services company, administers for Tether has come to light thanks to a recent Wall Street Journal investigation. According to reports, a different business, BGC Partners, a subsidiary of Cantor Fitzgerald, is getting ready to introduce its own cryptocurrency exchange in the first quarter of 2023.
The disclosure of Tether’s reserves comes at a time when concerns about the cryptocurrency market’s lack of transparency are being raised. Kraken, a cryptocurrency exchange, has recently been accused by the U.S. Securities and Exchange Commission (SEC) for offering unregulated securities in the form of crypto staking. Although stablecoins maintain equilibrium with their overall market capitalization differently than staking, their volatility raises questions about their stability.
The algorithmic stablecoin TerraUSD (UST) had a collapse in May 2022, causing a catastrophic crisis in the cryptocurrency market that had long-lasting effects. Discussions regarding the need for increased openness in stablecoin reserves were sparked by this incident.
Due to its convertible value with the U.S. Dollar, Tether (USDT), which has a market capitalization of $68.20 billion, is the most traded cryptocurrency.