There is no IOU obligation once USDT tokens are redeemed for fiat.
Naturally because at that point no counterparty relationship exists. Anyone who holds USDT, however, is exposed to considerable counterparty risk.
Imagine that a consumer deposits $100,000 in a bank. Its very common for banks to take $50,000 or more of that deposit and invest in it high risk schemes, which will fail. Leaving banks unable to pay those who deposited money in it. If tether is 74% backed, its far more liquid, stable and safe than the banking industry on average. The US dollar is far less than 74% backed in gold and I never see anyone complain about it.
The way I see it, they are chipping away at their reserve ratio. If the ratio gets low enough, they could fail in a bank run. That 26% loss came from a single law enforcement seizure. They are one or two seizures away from total inability to honor their obligations.
I'm not comparing them to conventional banks. Maybe they are better than some. It's a fundamentally precarious situation though. There are other stablecoins I'd feel much safer holding (though USDT has vastly superior liquidity which is an obvious consideration for many people).
Is correlation between tether volume and bitcoin demand, surprising?
Of course not. People wiring money to Tether is the same thing as people wiring money to any Bitcoin exchange. It's being used to buy cryptocurrency.
I know this.
You know this.
Experts and professionals appear not to know this, however, as they continue to claim there is something shady, suspicious or criminal about it:
Yeah that old narrative has become tiresome for sure. At least there has been some pushback against it:
Tether’s Impact on Bitcoin Price Not ‘Statistically Significant,’ Study Finds