Stablecoins are not exclusively backed by USD, states Tether’s new terms of serv

[Leonardo]

The long-standing debate about the backing of Tether’s USDT tokens has emerged again, after the company made alterations to its terms of service. It now states that the reserves backing USDT comprise of “traditional currency and cash equivalents and … other assets and receivables from loans made by Tether to third parties,” reported Bitcoin news.

Even though Tether dominates the stablecoin market in terms of market share and market capitalization, it is facing increasing competition from newer stablecoin projects. These newer coins have been able to provide evidence of U.S. dollar backing since their launch, reported the publication.

Tether reversed the previous assertion that all the USDT tokens were backed one-to-one with USD reserves, as a part of its terms of service update. The home of the dominating stablecoin now reads,

“Every tether is always 100% backed by our reserves, which include 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.”

The legal page of the company also noted that the composition of the reserves to back the Tether Tokens was within the sole control and discretion of Tether. It further added,

“Tether reserves the right to delay the redemption or withdrawal of Tether Tokens if such delay is necessitated by the illiquidity or unavailability or loss of any Reserves held by Tether to back the Tether Tokens, and Tether reserves the right to redeem Tether Tokens by in-kind redemptions of securities and other assets held in the Reserves.”

On one hand, Tether reversed its claim of backing all outstanding USDT by USD. On the other hand, competing stablecoins have provided regular attestation reports, confirming fiat backing.

Trueusd [TUSD] provided between one and three attestation reports each month, since its launch in March 2018. According to its recent report, the company’s 201,727,658 outstanding TUSD tokens were then backed by $202,621,765 dollars, held in Trueusd’s bank accounts.

According to data provided by Bitcoin news, Circle published its fourth monthly attestation report concerning USD reserve for its USDC token. The report stated that as of January 31, 2019, the outstanding  307,7903,924 USDC tokens were backed by $307,848,312 held in custody accounts.

Paxos, after launching in September 2018, also provided monthly attestation reports. Its recent report, dated 29 February 2019, asserted that 109,543,189.7 PAX tokens were backed by a USD reserve “at least equal to or greater than “$109,543,189.70.”

Source: https://ambcrypto.com/stablecoins-are-not-exclusively-backed-by-usd-states-tethers-new-terms-of-service/

[Alcor]

The main thing is that a stable USDT coin is, allegedly, fully supported by cash and non-cash currency and other assets. In my opinion, it does not matter what currency and assets are supported by their stable coin. I am even pleased that this coin is supported not only by the dollar. It is also very good that other stable coins appear, which will be supported by the currencies of Japan, South Korea, Switzerland and other countries. Now we can choose those stable coins that are closer to our national money.

[Peter90]

@Alcor,
the main thing is that originally Tether let people think that USDT was 100% backed by $ in the bank, while apparently it was not.

The second main thing is that people don't know what are USDT backed with:

1) traditional currency
2) cash equivalent
3) other assets
4) receivables from loans to third parties

They don't explain what they mean by those terms, and they don't discover how much of USDT is backed by each item respectively.
In my view, this is an essential lack of transparency.


Are they saying, USDT is backed also by currencies other than the US dollar?
As I understand it, USDT is still supported only by the US dollar.
But I admit, they say, USDT is pegged to the $, they don't say USDT is backed by the $
https://tether.to

[Noverteno]

In fact, it is recognized that the USDT will be supported by any ordinary currency and even securities. Thus, it will even be less prone to stress if a problem arises with a particular currency. If this coin will be provided with different currencies, then, in my opinion, it will be even better.

[Peter90]

In fact, it is recognized that the USDT will be supported by any ordinary currency and even securities. Thus, it will even be less prone to stress if a problem arises with a particular currency. If this coin will be provided with different currencies, then, in my opinion, it will be even better.

... unless there is a general currency crises, involving all Fiat-currencies.

It's becoming clear that the national debt levels are unsustainable.
Even the central banks start to openly recognise it (they knew already, now they are starting to talk openly about it): "In the longer term, we need to change the game," Carney said. "When change comes, it shouldn’t be to swap one currency hegemon for another."
This was the President of the Bank of England, England's Central Bank.

https://www.zerohedge.com/news/2019-08-23/unprecedented-shocking-proposal-boes-mark-carney-urges-replacing-dollar-libra

In case of a general currency crises, the anchor won't be neither some national currency nor a mix of national currencies, nor a mix of fiat currencies and Government bonds, nor some international currency like SDR (Special drawing rights. The currency of the International Monetary Fund).
When distrust hits fiat currencies, Govs and Central Banks are hit.
The anchor can only be something outside Govs and CBs, as Carney says.
A commodity for example.