IF USDT would collapse what do you think will happen to the BTC price?

[bryant.coleman]

One concern that I have for USDT is if the SEC would classify this stablecoin as a security. I know that they are possibly working on that case, but let’s just hope that SEC would not target USDT next. I know that XRP has gone down the wire because of their pending lawsuit from the US SEC, but USDT’s collapse would be total chaos for Bitcoin, Ethereum and other cryptocurrencies. 

I don't think that USDT can be defined as a security. It is the digital equivalent of US Dollar, or it is what the Tether foundation claims it is. XRP was always in a difficult position, because they had a 100% premine and more than half of all the tokens were being held by the Ripple Foundation. In short, XRP was like low hanging fruit and made an easy target for the SEC. I don't think that any of the other cryptocurrencies (including USDT) are in immediate danger.

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[Akiko]

One concern that I have for USDT is if the SEC would classify this stablecoin as a security. I know that they are possibly working on that case, but let’s just hope that SEC would not target USDT next. I know that XRP has gone down the wire because of their pending lawsuit from the US SEC, but USDT’s collapse would be total chaos for Bitcoin, Ethereum and other cryptocurrencies.  

Yes thats the problem if SEC is also looking to file a case against USDT then many coins will be affected not only BTC since USDT is also have their own market pair all of them will all be affected in price . maybe 20-30% dump will happen to many crypto currency if SEC sued it the same with XRP.

But bitfinex already answered why USDT will not be targeted of SEC and its explain here https://cointelegraph.com/news/relax-tether-won-t-be-targeted-by-sec-says-bitfinex-cto/amp .

[jacafbiz]

The collapse of USDT will set the space back for at least two years, the money that is being used to pump BTC comes mainly from USDT and when the source of the fund is gone the house will collapse, I just hope Tether team settles their issue with SEC this year because USDT has done more good than bad for the space

[DooMAD]

But bitfinex already answered why USDT will not be targeted of SEC and its explain here https://cointelegraph.com/news/relax-tether-won-t-be-targeted-by-sec-says-bitfinex-cto/amp .

And you don't think his perspective might be just a tiny bit biased?  Of course the people selling you the dodgy token are going to tell you it's fine.  They're hardly going to turn around and say "yeah, you should avoid buying our product".

[pixie85]

One concern that I have for USDT is if the SEC would classify this stablecoin as a security. I know that they are possibly working on that case, but let’s just hope that SEC would not target USDT next. I know that XRP has gone down the wire because of their pending lawsuit from the US SEC, but USDT’s collapse would be total chaos for Bitcoin, Ethereum and other cryptocurrencies. 

Is this really the only concern that you have?

My concern would be that USDT is not backed. Even if they were backed my concern would be that they lied about being backed! This is a serious red flag that completely disqualifies USDT in my eyes.

I know that many people here think that since tether people were doing fine for the last 2 years they will continue to be and keep printing money indefinitely but it doesn't work like this!

[Sithara007]

The collapse of USDT will set the space back for at least two years, the money that is being used to pump BTC comes mainly from USDT and when the source of the fund is gone the house will collapse, I just hope Tether team settles their issue with SEC this year because USDT has done more good than bad for the space

First of all, Tether is just a token issued by the Bitfinex exchange. If the SEC classifies USDT as a security, then Bitfinex needs to take back all the USDT tokens and reimburse the users with actual US Dollar funds. This won't be difficult, as they already claims that 100% of their tokens are backed up with real assets. There is only a very small chance of SEC targeting Tether, but even if that happens there is not much to worry about.

[darewaller]

The collapse of USDT will set the space back for at least two years, the money that is being used to pump BTC comes mainly from USDT and when the source of the fund is gone the house will collapse, I just hope Tether team settles their issue with SEC this year because USDT has done more good than bad for the space

First of all, Tether is just a token issued by the Bitfinex exchange. If the SEC classifies USDT as a security, then Bitfinex needs to take back all the USDT tokens and reimburse the users with actual US Dollar funds. This won't be difficult, as they already claims that 100% of their tokens are backed up with real assets. There is only a very small chance of SEC targeting Tether, but even if that happens there is not much to worry about.

Tether is also keeps all their money on bahamas, which means that bitfinex can't and won't deal with USA authorities, if SEC decides that USDT is an illegal thing, the worst thing that could happen would be the fact that they can't deal with american companies and that's it. You will not have usdt in places like Coinbase for example, but as long as it is out of USA you could still continue to work with USDT without a problem and they won't need to shut down or reimburse anyone at all.

However I still think the "demand" for USDT is not as high as they claim to be, they keep printing USDT and probably buying bitcoin with it, which made them richer than the amount they probably printed, but it also doesn't mean that they will end up with any legal problems neither. Even if they were delisted from all USA exchanges, it is still not going to crash the market too much.

[Smartprofit]

Hey Guys

New here but not in the Space.

What's always annoying me about the whole Tether discussion is the fact that everybody that talks about the topic mostly assumes that if usdt collapses (not saying that it will) bitcoin would dump harder than ever before. While I can see that a lot of volume is through tether ( I would say its the majority) the collapse would by no mean be a small event. If you look back tho to end of 2018 when the whole Crypto Capital saga took place and usdt "dumped" into the .80s the only thing that really happened was that btc immediately spiked by a good amount simply because if you price btc/usdt if one collapses the other rises. So let's just assume that the day when tether would collapse actually comes and it's not just a few days of uncertainty. What side would win. A) everybody just want's to flee usdt (into btc) or B) everybody want's to flee crypto as a whole (through btc into "real usd" / coinbase)

I also believe that the collapse of Tether will not lead to a drop in the price of bitcoin, but an increase in its price.  

Why do I think so?  There are several reasons for this:  

1) Prior to the creation of stablecoins, all altcoins were traded in pairs to Bitcoin.  This did not hinder the growth of the Bitcoin price, but rather added value to it.  

2) Tether is not the only stablecoin in the world.  Besides it, there are many other stablecoins.  

3) Tether is a direct competitor to Bitcoin.  For example, at one time, usdt was used in international trade between China and other countries.

[TheGreatPython]

Tether is also keeps all their money on bahamas, which means that bitfinex can't and won't deal with USA authorities, if SEC decides that USDT is an illegal thing, the worst thing that could happen would be the fact that they can't deal with american companies and that's it. You will not have usdt in places like Coinbase for example, but as long as it is out of USA you could still continue to work with USDT without a problem and they won't need to shut down or reimburse anyone at all.

However I still think the "demand" for USDT is not as high as they claim to be, they keep printing USDT and probably buying bitcoin with it, which made them richer than the amount they probably printed, but it also doesn't mean that they will end up with any legal problems neither. Even if they were delisted from all USA exchanges, it is still not going to crash the market too much.

But, I am going to go out on a limb and say that nothing major will happen. You may think that it could change a lot but look at the bitcoin price today, how many people do you really think owns USDT at this point?

Everyone is buying bitcoin with their money so I do not think that people are really buying USDT all that much, and there isn't all that much USDT in the market neither, people are selling so someone must be buying but considering the BTC price I assume maybe Tether has collected more and more considerably to make it stay at 1 dollar, there aren't enough money in people to keep it at 1 dollar at this point since they all went to BTC, so it must be Tether that keeps the price this way. This is why I think there is a bit of damage obviously, it is part of crypto, there is no doubt about that, but it is not going to be anything major at all.

[Karartma1]

One concern that I have for USDT is if the SEC would classify this stablecoin as a security. I know that they are possibly working on that case, but let’s just hope that SEC would not target USDT next. I know that XRP has gone down the wire because of their pending lawsuit from the US SEC, but USDT’s collapse would be total chaos for Bitcoin, Ethereum and other cryptocurrencies. 

Is this really the only concern that you have?

My concern would be that USDT is not backed. Even if they were backed my concern would be that they lied about being backed! This is a serious red flag that completely disqualifies USDT in my eyes.

I know that many people here think that since tether people were doing fine for the last 2 years they will continue to be and keep printing money indefinitely but it doesn't work like this!

The majority of Tether users don't know shit regarding what you are talking about: find me somebody who uses USDT consciously knowing all you wrote. You will not find many people aware of the USDT bomb. That's okay, bitcoin will live even after Tether's death and I am also fine with it.

[exstasie]

However I still think the "demand" for USDT is not as high as they claim to be, they keep printing USDT

People keep saying stuff like this, but the data actually shows incredibly strong demand for USDT, particularly in East Asia. Consider this report from Chainalysis:

East Asia is the world’s largest cryptocurrency market, accounting for 31% of all cryptocurrency transacted in the last 12 months.

As we touched on above, stablecoin usage is especially high in East Asia, making up 33% of all value transacted on-chain. That share has been rising over the last few months though, with Tether — a popular stablecoin pegged to the U.S. dollar — actually beating out Bitcoin to be the most-received cryptocurrency by East Asia-based addresses in June 2020.

As we discussed in our 2019 APAC report, much of stablecoins’ popularity in East Asia stems from the Chinese government’s decision in 2017 to ban direct exchanges of yuan for cryptocurrency. As a result, Tether has become the de facto fiat stand-in for Chinese cryptocurrency users and primary means of on-ramping to Bitcoin and other standard cryptocurrencies. Though yuan-for-Tether trades are also not allowed under the ban, it’s common for users to buy Tether under the table from OTC brokers or through other means such as by using a foreign bank account. By using Tether as a fiat stand-in instead of, say, Bitcoin, traders can lock in gains without off-ramping into fiat by simply converting other currencies into Tether and leaving the Tether in their wallet or exchange account. Bitcoin, by contrast, has too much price volatility for this to be feasible.

https://blog.chainalysis.com/reports/east-asia-cryptocurrency-market-2020

There are legitimate secondary use cases emerging too:

While traders, specifically prop traders, represent Tether's primary use case, we have identified significant secondary use cases as well. Krishna Sriram at Quantstamp told us that ordinary users in emerging markets both in and out of East Asia use Tether as a means of value storage, as well as for cross-border remittances. As we’ll explore in greater detail later, some of those international payments may represent capital flight from countries like China. 

When we spoke to Dovey Wan about East Asia’s outsized Tether usage, she agreed the yuan trading ban was a major factor, and also pointed out Tether’s effectiveness for carrying out everyday transactions. “Tether has become a U.S. dollar replacement for many people in China. Lots of Chinese businesses and merchants, especially those working overseas, now accept Tether from customers,” she told us.

Not to mention its emerging use in money laundering operations:

USDT is widely used in money laundering, gambling and other illegal activities, an executive at a blockchain platform told Caixin. In October, a local branch of the People's Bank of China in the southern Chinese city of Huizhou conducted mass arrests related to cross-border online gambling, the first crackdown on activities involving USDT. In a blog post, the central bank said 77 suspects were arrested for using USDT in cross-border transactions to launder gambling proceeds worth nearly 120 million yuan.

Most USDT transactions in the Huizhou case were made on Huobi, a Seychelles-based cryptocurrency exchange founded by Tsinghua University graduate and former Oracle engineer Leon Li. Online gambling sites use gamblers' funds to buy USDT on Huobi and then sell the cryptocurrency, thus "washing" the funds into legitimate cash flow, Huizhou police told Caixin.

https://asia.nikkei.com/Spotlight/Caixin/How-illegal-online-gambling-launders-150bn-from-China

In this context (and considering how much USDT liquidity remains on exchanges) is $20 billion issued really that surprising?

[Sithara007]

However I still think the "demand" for USDT is not as high as they claim to be, they keep printing USDT and probably buying bitcoin with it, which made them richer than the amount they probably printed, but it also doesn't mean that they will end up with any legal problems neither. Even if they were delisted from all USA exchanges, it is still not going to crash the market too much.

Well... here is the problem. If they use their reserve funds to purchase BTC, then how they can claim that USDT is fully backed up with USD? Right now the BTC prices are going up and everyone is happy about it. But what would happen in case the Bitcoin prices drop and the USDT tokens are not actually backed up to US Dollar one to one? IMO, they are supposed to keep their backup funds in USD. They can't use it for any other purpose.

[DooMAD]

Well... here is the problem. If they use their reserve funds to purchase BTC, then how they can claim that USDT is fully backed up with USD?

They aren't claiming that anymore.  They haven't been for some time now.  I thought people knew that?

[Sithara007]

Well... here is the problem. If they use their reserve funds to purchase BTC, then how they can claim that USDT is fully backed up with USD?

They aren't claiming that anymore.  They haven't been for some time now.  I thought people knew that?

OK. So they are no longer claiming that their tokens are fully backed up with real USD. Great! And most of the people continue to hold USDT, despite knowing that these tokens are not fully backed up. In that case, if USDT becomes worthless and everyone loses their money, then they should just blame themselves. And meanwhile the USDT market capitalization has jumped to $24.2 billion. They are just creating money out of thin air.

[South Park]

USDT carries a huge marketcap, if something bad happens it will affect the whole crypto space big time but I'm sure bitcoin will be the first to recover, we can't deny the fact that Bitcoin is well adopted than others and some are even waiting for a golden opportunity to buy bitcoin for cheap price

The huge market cap of USDT should be the least of our worries, USDT has the combined volume of BTC and ETH, that should tell you how big it is and t makes sense, when people sell their crypto ideally they will like their fiat to go to their bank accounts, but with banks flagging and closing those accounts and taking days to get your money back to exchanges in which you can miss a big movement people prefer to use USDT instead so they can always jump back in the market and without it we will lose the best source of liquidity we have.

[error08]

USDT carries a huge marketcap, if something bad happens it will affect the whole crypto space big time but I'm sure bitcoin will be the first to recover, we can't deny the fact that Bitcoin is well adopted than others and some are even waiting for a golden opportunity to buy bitcoin for cheap price

The huge market cap of USDT should be the least of our worries, USDT has the combined volume of BTC and ETH, that should tell you how big it is and t makes sense, when people sell their crypto ideally they will like their fiat to go to their bank accounts, but with banks flagging and closing those accounts and taking days to get your money back to exchanges in which you can miss a big movement people prefer to use USDT instead so they can always jump back in the market and without it we will lose the best source of liquidity we have.

if USDT would collapse, which means tether will lose its value, then people who hold usdt have to sell it and buy something better, for instance; bitcoin or any other stable coin.
in this case, bitcoin value wouldn't be going down rather gain value thus the price of bitcoin and altcoins will increase.

The collapse of the usdt will have an impact on the companies that issued it, as usdt backed by real USD or they claimed backed by [traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”] so they have to exchange their reserves in order to cover every sellout of usdt.

[Sithara007]

The huge market cap of USDT should be the least of our worries, USDT has the combined volume of BTC and ETH, that should tell you how big it is and t makes sense, when people sell their crypto ideally they will like their fiat to go to their bank accounts, but with banks flagging and closing those accounts and taking days to get your money back to exchanges in which you can miss a big movement people prefer to use USDT instead so they can always jump back in the market and without it we will lose the best source of liquidity we have.

For me, it is the market cap that is the primary concern. USDT was originally designed to act as an intermediate medium for trading, and therefore it is expected that the trade volumes would be higher. As the volatility increased, a lot of people were storing a part of their wealth in the form of stablecoins. And this is the most risky part. Storing your wealth in USDT is just like storing your cryptocurrency in an exchange wallet.

[lonelygrimm]

In my opinion, bitcoin price will not be affected if the USDT price collapses, yes it maybe a little bit affected, but it won't have much effect. bitcoin and usdt are different currencies. from a different world too. less likely to be affected. but yes it maybe have a big effect on the price of bitcoin, for example the price of bitcoin will get higher if the usdt collapses. or more and more new investors are buying bitcoin because it is more suitable for investment. but yeah don't know, I can't predict.

[Smartprofit]

Hey Guys

New here but not in the Space.

What's always annoying me about the whole Tether discussion is the fact that everybody that talks about the topic mostly assumes that if usdt collapses (not saying that it will) bitcoin would dump harder than ever before. While I can see that a lot of volume is through tether ( I would say its the majority) the collapse would by no mean be a small event. If you look back tho to end of 2018 when the whole Crypto Capital saga took place and usdt "dumped" into the .80s the only thing that really happened was that btc immediately spiked by a good amount simply because if you price btc/usdt if one collapses the other rises. So let's just assume that the day when tether would collapse actually comes and it's not just a few days of uncertainty. What side would win. A) everybody just want's to flee usdt (into btc) or B) everybody want's to flee crypto as a whole (through btc into "real usd" / coinbase)

If tether is destroyed, Bitcoin's price will rise (at least double).  In my opinion, this is an obvious fact. 

Usdt users will start buying bitcoin en masse at the highest possible price.  The capitalization of bitcoins and many of the best altcoins will grow.  Tether is a direct competitor to Bitcoin.  Previously, alternative cryptocurrencies only traded in pairs with bitcoins.  Now Tether is even being used in cross-border payments with China (instead of Bitcoin). 

Tether is not the US dollar, but in the crypto industry it represents the power of the US dollar.  When Tether crashes, people will realize that Bitcoin is self-sufficient. 

It is the base currency, a measure of the value of all other assets.

[CryptoLogo]

The collapse of USDT will set the space back for at least two years, the money that is being used to pump BTC comes mainly from USDT and when the source of the fund is gone the house will collapse, I just hope Tether team settles their issue with SEC this year because USDT has done more good than bad for the space

It is not known whether this will actually be the case. And the collapse is a big question. Remember the time when USDT was already close to collapse, nothing happened.
Lawsuits against Bitfinex? It didn't work. Even if this happens now, we have many alternatives that can correct the situation to one degree or another.