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Wall Street CEO Backs Tether’s Asset Claims as USDT Hits $95Bn Market Cap

Last Updated January 17, 2024 11:39 AM
Teuta Franjkovic
Last Updated January 17, 2024 11:39 AM

Key Takeaways

  • Cantor Fitzgerald CEO Howard Lutnick reiterates confidence in asset backing.
  • Lutnick says skepticism remains despite asset backing shift.
  • He stressed the need for official audit to continue.

Amid ongoing skepticism about whether Tether truly possesses the assets backing its $95 billion stablecoin, USDT, a key affirmation has come from Howard Lutnick, the head of Cantor Fitzgerald.

Lutnick, whose firm is involved in managing funds for Tether, said  the stablecoin holds the assets it claims to have.

Tether Under Scrutiny for Backing of USDT

Lutnick vouched for Tether in a recent interview  at the World Economic Forum in Davos. This comes amidst long-standing questions regarding Tether’s financial claims , especially as its stablecoin, USDT, has expanded into a colossal entity in the crypto market.

Addressing these concerns, Lutnick said  “they have it”, backing Tether’s claim that it possesses the financial assets it claims to have.

Tether has been subject to intense scrutiny regarding the backing of its digital currency. With a market capitalization surpassing $95 billion , USDT stands as the most widely used stablecoin. This immense scale and widespread use have placed Tether at the center of critical observation, with stakeholders and regulators interested in the authenticity and reliability of its asset backing.

Lutnick said :

“I manage many of their assets. From what I’ve seen – and we did a lot of work – they have the money they say they have.”

Tether’s Asset Backing: A Closer Look Amid Industry Skepticism

Howard Lutnick’s recent comments appear to align with Tether’s latest attestation report . This indicates the stablecoin issuer had $86.4 billion in assets against $83.2 billion in liabilities as of September 30. This report marked a shift in Tether’s reserve composition. In the past, a considerable portion of Tether’s reserves was held in commercial paper .  This raised concerns among some observers. However, the current attestation  shows a transition. USDT is now predominantly backed by US Treasury bills, which are generally regarded as some of the safest assets available. Notably, the report also highlighted that Tether no longer holds any commercial paper.

Despite this shift, the cryptocurrency industry remains somewhat unconvinced about the overall quality of Tether’s reserves. This skepticism was further fueled by a recent poor rating from credit agency S&P Global. The rating assessed various factors including the quality of assets backing the stablecoin, regulatory and supervisory aspects, governance, transparency, liquidity, redeemability, and track record. S&P Global’s assessment  served to reinforce existing concerns about Tether’s financial foundations.

As the most widely used stablecoin, with a massive market capitalization, the scrutiny of Tether’s asset backing and overall stability is critical, not just for the company, but for the broader cryptocurrency market as well.

Need for Official Audit

Users of  USDT are still awaiting an official audit. This would provide a more detailed and transparent overview of the company’s financial standing, as compared to the existing attestations. Lutnick, who has expressed his admiration for Tether, highlighted this distinction. His firm, Cantor Fitzgerald, plays a crucial role as a custodian for Tether’s Treasury holdings , underscoring his vested interest in the stablecoin’s operations.

In a recent conversation addressing a hot topic in the crypto world – the approval and listing of numerous spot Bitcoin exchange-traded funds (ETFs) – Lutnick offered his perspective on the value of Bitcoin  and stablecoins, particularly in the American context. He characterized cryptocurrencies as speculative assets within the United States. However, he pointed out that in other countries, such as Argentina, Venezuela, and Turkey, cryptocurrencies and stablecoins play a more significant and practical role.

Lutnick emphasized  that in these nations, where economic instability and currency devaluation are prevalent, cryptocurrencies offer a means to preserve wealth and maintain purchasing power.

He said :

“This is a speculative asset for us, but for countries like Argentina, Venezuela, Turkey, these crypto assets matter, stablecoins matter in those countries. It’s a way to hold on to the dollar.”

His comments reflect the diverse functions and implications of cryptocurrencies in different global economies, highlighting their potential as both investment vehicles and financial lifelines.

Bonus: Ex-Bitboy Ben Armstrong Reiterates Skepticism Over Tether’s Asset Backing

Contrasting with Lutnick’s statement, however, are views like those expressed by influencer Ben Armstrong in a recent tweet . Armstrong has long held a critical stance towards Tether’s parent company, iFinex, and its early operations. He suggested that iFinex, known for its controversial beginnings, has a history of questionable financial practices, particularly in relation to Tether.

Armstrong accused the company of “printing money” through Tether and engaging in covert financial activities since its shift to shadow banking around 2014-2015. These allegations highlight the deep-rooted trust issues and controversies that continue to surround Tether, painting a complex picture of the stablecoin’s operational history and financial integrity.

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