Good news for Crypto traders using Tether (USDT) as a substitute to the US Dollar while trading cryptos: All 440 mln tokens in circulation are indeed backed by the equivalent of US Dollars stored on the bank accounts of Tether Limited.
This has been confirmed this week by the New York based accountancy and consultancy firm Friedman LLP.
What is Tether?
USDT is a cryptocurrency that is pegged to the US Dollar. In essence, 1 USDT should be roughly equal $1 (see graph below)as the amount of tokens in circulation is backed by Tether Ltd on a one to one bases by storing the USD amount on a designated bank account.
USDT has become very popular as it has the benefits of a cryptocurrency (fast transaction times and settlement times and most importantly the ability to trade on crypto to crypto exchanges like Bittrex or Poloniex) and gives the opportunity to traders to convert any position into something that tracks the US Dollar, without actually having to convert into fiat.
Why were there any doubts about USDT?
There were 2 main reasons why many people doubted if USDT would still be a viable alternative.
So what's changed now?
Having realised the growing concerns by the community about the increasing amount of tokens in circulation Tether Ltd hired a consultancy firm to analyse the bank statements versus the amount of outstanding tokens. In a statement Tether LTD said:
"Friedman was able to provide consulting services for us on an expedited basis, using a procedures date of September 15, 2017. These consulting services do not constitute an audit or attestation engagement, which would include a significantly expanded scope of procedures and take substantially more time to complete."
Note they have not initiated a full audit as the primary goal was to assure investors that the money was there, rather than go through the full lengths and costs of a proper audit.
"We hope that the community considers the attached memorandum for what it is: a good faith effort on our behalf to provide an interim analysis of our cash position and our issued and outstanding tokens, as part of ongoing efforts to further professionalize the transparency mechanisms of Tether Limited."
In the memorandum provided by Friedman LLP the fiat amounts indeed seem to be matching the outstanding supply of Tether tokens as is visualized in the below screenshot.
As of Sept. 15th the total amount on the bank accounts was $442,984,592. The USDT supply was 442,481,760.
This means there was a surplus of $502,832 on the bank accounts just 2 weeks ago.
It seems therefore that USDT are still a viable alternative to fiat indeed. If only the redeem function would return, that would remove any other concerns investors may have.
Currently there are 444951600 Tokens. We can only assume that the 2 mln tokens added have also resulted in an increase of $ on Tethers bank accounts...
Are you more inclined to trade USDT based on the work done by Friedman? Let me know in the comments below!
Stay tuned!
References:
https://steemit.com/bitcoin/@attalis/is-tether-still-a-viable-alternative-to-fiat-to-crypto-trading
http://omnichest.info/lookupsp.aspx?sp=31
https://tether.to/announcement-transparency-update/
https://tether.to/wp-content/uploads/2017/09/Final-Tether-Consulting-Report-9-15-17_Redacted.pdf
Images:
https://www.worldcoinindex.com/coin/tether
https://tether.to/wp-content/uploads/2017/09/Final-Tether-Consulting-Report-9-15-17_Redacted.pdf
