Tether and BTC's current price

[Blawpaw]

BTCCorrect me if I'm wrong, but in my understanding, Tether (USDT) is kinda like a digital dollar, but in reality, it is not backed by the federal reserve, but it functions as if it was as it can be issued regardless of any protocol restrictions. In 2017, rumours spread around the community saying Bitfinex was issueing Tether like if there was no tomorrow. So, my question here is, how is the issuance of USDT is managed and controlled and could someone "print" a lot of Tether out of thin Air and use it to inflate Bitcoin's price?

[1715634658]

1715634658

[1715634658]

1715634658

[1715634658]

1715634658

[bitmover]

BTCCorrect me if I'm wrong, but in my understanding, Tether (USDT) is kinda like a digital dollar, but in reality, it is not backed by the federal reserve

It is a digital dollar, but not backed by the federal reserve.

It is more like a private debit. Exchanges send USD to Tether company, and Tether give them back USDT.

Tether will pay back 1 dollar for each USDT you give then back, so it is like a private debt with zero interest rates.

 Exchanges such as huobi and binance are the main holders of tether. You can see the rich list here:
https://wallet.tether.to/richlist

but it functions as if it was as it can be issued regardless of any protocol restrictions. In 2017, rumours spread around the community saying Bitfinex was issueing Tether like if there was no tomorrow. So, my question here is, how is the issuance of USDT is managed and controlled and could someone "print" a lot of Tether out of thin Air and use it to inflate Bitcoin's price?

Tether is supposedly backed up by USD. There is no protocol restrictions, but people will lose trust in tether if they just print out regardless of being able to backed it up.

However, there are not any real and trusted audits going on to know if tether is really backed up by USD... so there might be a problem here.

[DapanasFruit]

And recently Tether was slapped with a multi-million dollar fine because of bad practices. Quite unfortunate because USDT remains to be the most trusted, biggest and widely circulated stablecoin and yet the people behind it are not doing their job...maybe they are just enriching themselves by issuing Tether without anything backing them up - they are actually practicing what fiat money is doing so maybe that's the reason why they think they can get away with it. In the past, people had had this special concern and question on the lack of transparency from Tether and maybe it is about time to exposed them so other stablecoin will not be following their path.

[Kemarit]

Speaking of Tether: CFTC Orders Tether and Bitfinex to Pay Fines Totaling $42.5 Million.

October 15, 2021

Washington, D.C. — The Commodity Futures Trading Commission today issued an order simultaneously filing and settling charges against Tether Holdings Limited, Tether Limited, Tether Operations Limited, and Tether International Limited (d/b/a Tether) for making untrue or misleading statements and omissions of material fact in connection with the U.S. dollar tether token (USDT) stablecoin. The order requires Tether to pay a civil monetary penalty of $41 million and to cease and desist from any further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged.

So they are quite shady and running on the premise of running on a "fractional reserve".

I also urged members to read a post by @NotATether - Is Tether really that stable? Let's find out.

[bittraffic]

USDT is very much used today or perhaps the only stablecoin known by the majority of the trader who unknowingly knew it's not a very trusted stablecoin compared to its counterparts like USDC or the DAI.

They all work the same way but Tether is just more popular. There was a fud about stablecoin smartcontract which be modified to freeze our USDT funds, it would really be a blow for us if our funds are stuck.

[Blawpaw]

Speaking of Tether: CFTC Orders Tether and Bitfinex to Pay Fines Totaling $42.5 Million.

October 15, 2021

Washington, D.C. — The Commodity Futures Trading Commission today issued an order simultaneously filing and settling charges against Tether Holdings Limited, Tether Limited, Tether Operations Limited, and Tether International Limited (d/b/a Tether) for making untrue or misleading statements and omissions of material fact in connection with the U.S. dollar tether token (USDT) stablecoin. The order requires Tether to pay a civil monetary penalty of $41 million and to cease and desist from any further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged.

So they are quite shady and running on the premise of running on a "fractional reserve".

I also urged members to read a post by @NotATether - Is Tether really that stable? Let's find out.

That's what I was referring to.

"Fractional reserve banking is a system in which only a fraction of bank deposits are backed by actual cash on hand and available for withdrawal. This is done to theoretically expand the economy by freeing capital for lending"

The way I see it is that Tether is being used like a hose that pumps from one end to flush out everything in the other end. If this is the case, serious implications will eventually rage...

[yazher]

They all work the same way but Tether is just more popular. There was a fud about stablecoin smartcontract which be modified to freeze our USDT funds, it would really be a blow for us if our funds are stuck.

As for me, those coins were only used when there was some kind of congestion in the market. I only use it as an option to keep the price of bitcoins that I sold in its current ATH. Other than that, I will just directly convert my cryptocurrencies into fiat where I don't need to worry about freezing funds. It'll just create another problem when that happened and you never know when will it gonna free to trade again.

[tranthidung]

Tether is supposedly backed up by USD. There is no protocol restrictions, but people will lose trust in tether if they just print out regardless of being able to backed it up.

However, there are not any real and trusted audits going on to know if tether is really backed up by USD... so there might be a problem here.

Tether company should bind their stable coin with NFT technology. It would help it has more trust and more transparency on what they're doing with their stable coin minting.

There are many accusation on the trustworthy of Tether company on how do they back their stable coin with USD in reality. There are many times that they mint huge USDT amount shortly before big bull runs of Bitcoin and crypto market.

Bad news on Tether will affect the market but the severity would be smaller than in the past. Because back in 2017 or 2018, the stable coin ecosystem is dominated by Tether USD but since 2020, we have so many stable coins to choose from. It changes the stablecoin ecosystem to be more decentralized.

Check the stablecoins list, there are some good alternatives

• USDC
• BUSD
• DAI

[pooya87]

Correct me if I'm wrong, but in my understanding, Tether (USDT) is kinda like a digital dollar,

That's what the ad says. But the reality is that Tether is like any other centralized shitcoin (BNB, USDC,...) created to fill a gap in the altcoin market.

You see a lot of traders are active on multiple platforms to trade altcoins that aren't available everywhere or don't have the same liquidity everywhere and also they do a lot of arbitrage trading.
This requires them to move their funds between exchanges a lot. In the past they used shitcoins such as XRP to do it quickly and at a cheap cost. Then the gap was filled with these centralized coins that were supposed to have fixed exchange rate and they are being used to serve these traders.
Eventually people also started using these so-called stable coins to escape the bloodshed in altcoin market as bitcoin goes up or down.

So a better description is "a temporary tool for traders".

In 2017, rumours spread around the community saying Bitfinex was issueing Tether like if there was no tomorrow. So, my question here is, how is the issuance of USDT is managed and controlled and could someone "print" a lot of Tether out of thin Air and use it to inflate Bitcoin's price?

Back in 2017 it was a wrong assumption but made sense for those people to make this assumption.
Bitfinex was printing a lot of Tether but it was doing it to satisfy the gigantic increase in the number of altcoin traders and the trading volume there not to "pump bitcoin".
It was proven to be a complete bullshit when in 2018 Bitfinex continued printing Tether even more than 2017 but bitcoin price kept going down which proved there is no relationship between bitcoin price and Tether circulating supply.

As I said earlier the usage of Tether is mainly for altcoin traders and those who want to escape the dumping market. You know that during 2018 the altcoins were dumping fast and the trillions of dollars that exited shitcoin market were using Tether.

Exchanges such as huobi and binance are the main holders of tether. You can see the rich list here:
https://wallet.tether.to/richlist

A good proof of what I said, Tether is for traders and mainly the altcoin traders!

[davis196]

The debates about Tether having any reserves to backup their coin is continuing during the last 4 years.
I don't know why do you come up with the same question that has been asked multiple times for the last 4 years.You have a legendary account.It's weird that you still don't know how tether/stablecoins work.
All the FUD guys and Bitcoin haters keep pointing out that the main reason behind the Bitcoin price growth might be Tether creating stablecoins out of thin air.Those allegations had never been proven with solid evidence by any FUDster/BTC hater whatsoever.

[leea-1334]

As already answered,,, Tether is backed by actual USD which is supposed to be 1 to 1. Many accusations have come over the years that they do not even have this although supposedly there are annual audits and the audits pass. Who is to say the audits are not true,,, we have to trust the US government.

@davis196 But his questions are valid,,, and I think I learned new things here although I would still ask: "who decides and controls issuance".

By the way Federal Reserve is the one that prints money without backing, literally they print on demand.

[sunsilk]

BTCCorrect me if I'm wrong, but in my understanding, Tether (USDT) is kinda like a digital dollar, but in reality, it is not backed by the federal reserve, but it functions as if it was as it can be issued regardless of any protocol restrictions. In 2017, rumours spread around the community saying Bitfinex was issueing Tether like if there was no tomorrow. So, my question here is, how is the issuance of USDT is managed and controlled and could someone "print" a lot of Tether out of thin Air and use it to inflate Bitcoin's price?

They've been issued already to answer that and they've proven that there's a real asset that's backing up the actual supply of USDT. And that's why the past year's pump of bitcoin was considered manipulated because due to the printing of Tether.

By this time, it's a natural increase that we're getting, and thanks to the institutions that have been accumulating bitcoin. They're in a race to have the most supply of bitcoin.

[bitmover]

It was proven to be a complete bullshit when in 2018 Bitfinex continued printing Tether even more than 2017 but bitcoin price kept going down which proved there is no relationship between bitcoin price and Tether circulating supply.

As I said earlier the usage of Tether is mainly for altcoin traders and those who want to escape the dumping market. You know that during 2018 the altcoins were dumping fast and the trillions of dollars that exited shitcoin market were using Tether.

Exchanges such as huobi and binance are the main holders of tether. You can see the rich list here:
https://wallet.tether.to/richlist

A good proof of what I said, Tether is for traders and mainly the altcoin traders!

This is true.

While USDT is amazing for traders, who can trade basically any decent shircoin for usdt directly with huge volume, some other stable coins are better for holding.

Usdc and busd have constant audits and they look much more trustworthy than usdt for mid/long term holding.

For example take a look at busd page:
https://paxos.com/busd

REGULATED      
Paxos and BUSD are approved and regulated by the New York State Department of Financial Services, ensuring the utmost of consumer protections.

BACKED BY DOLLARS
BUSD is 100% backed by U.S. dollars held in FDIC-insured U.S. banks.
   AUDITED
A top auditing firm will attest to the matching supply of BUSD tokens and underlying U.S. dollars on a monthly basis

   

[amishmanish]

Tether has a circulating supply of 69 Billion. Bitcoin has a market cap of 1.2 Trillion at current prices. USDT is too small compared to the whole market for there to be any real issue of inflating Bitcoin price. There is this twitter account Bitfinex'd that keeps tweeting about USDT. Yet, does it even matter with so many other stablecoins in the offering.

What would Bitfinex gain by printing USDT and inflating BTC? Its not like they are the sole suppliers of BTC who will benefit from increasing price. The price increase is simply an effect of supply and demand. Any news about mainstreaming or supportive regulation makes the fence-sitters FOMO. The hodlers aren't much interested in selling as a lot of BTC hardly ever moves from its safe confines of cold-storage. This is what leads to these price rallies. Tether printing USDT when governments themselves are printing trillions in a span of a few months is hardly a problem that media/ public should focus on.

[NeuroticFish]

So, my question here is, how is the issuance of USDT is managed and controlled and could someone "print" a lot of Tether out of thin Air and use it to inflate Bitcoin's price?

You are partly correct. Tether made a lot of tricks and they issue more coins than the actual value they have in their vaults as backing. But I don't think they can do this too much more, since too many eyes are tunr in their direction.
But the users bought USDT for real value, which is altcoins, bitcoin or even fiat money. And while it should be temporary money for transactions, many use it as a backup currency and hold it for (too) long.
And - great point @amishmanish - Tether market cap is smaller than Bitcoin's, people have bought Bitcoin for fiat more than for USDT.

Tether may indeed inflate (and deflate) Bitcoin's price, but only between certain levels; and as said, also printing from thin air should be more limited now. The risk is there, but not too big, I think.

[Ararbermas]

I never heard such issue.. Well USDT is very known and popular stable coin in the market ever since before because of how it can help people to protect their money/profits from the volatility of the crypto market, so perhaps there's no such thing and only FUDS?. "freezing account" seems possible but in some scam sites only in my personal opinion . Lol wherein not on trusted exchanges because traders used to trade with USDT but no such issue until now.

[pooya87]

For example take a look at busd page:

Interesting, I admit I didn't know such regulations existed for stable-coins but by principle I still dislike centralized coins even if they are regulated and "low risk".

[bitmover]

For example take a look at busd page:

Interesting, I admit I didn't know such regulations existed for stable-coins but by principle I still dislike centralized coins even if they are regulated and "low risk".

I agree. Theoretically,  nobody should be holding stable coins for mid or long term.

However, they are an extremely low cost and easy to buy for people who live Latin America (where I live) and other developing countries.

It is not easy to buy usd directly here: there are high costs (fees and taxes, from 2-5%) and you can't just deposit in a local bank account. Being able to buy busd or usdc easily and "cheap" is a very good alternative for people who are not interested in high bitxoin volatility but still wants to get some protection against inflation.

I know usd has inflation as well (5% now, but usually 2%), but Brazil has nearly 5-10% every year or so...

[TheBeardedBaby]

I don't think the Tether will do better in the future with so bigly huge demand and prices rising you have to hold a immense amount of fiat locked and more regulations coming up soon.... and big whales are just entering the market so...   And if that happens the Terra stable coins will be one of the future options I think they'll move the tether out of the game.

[josephdd1]

BTCCorrect me if I'm wrong, but in my understanding, Tether (USDT) is kinda like a digital dollar, but in reality, it is not backed by the federal reserve, but it functions as if it was as it can be issued regardless of any protocol restrictions. In 2017, rumours spread around the community saying Bitfinex was issueing Tether like if there was no tomorrow. So, my question here is, how is the issuance of USDT is managed and controlled and could someone "print" a lot of Tether out of thin Air and use it to inflate Bitcoin's price?

Actually, the company itself can print as many Tethers as it wants as it is not limited like Bitcoin that can't superpass 21 million. But they claim that they print coins when they receive new collateral for their "digital dollar". To control if company is honest, there are audits that check different documents and collateral itself and according to official information, Bitfinex has necessary sum of money.