- Tether CTO, Paolo Ardoino, has emphasized that Tether will keep leading the pack in transparency
- Mr. Ardoino also pointed out that Tether is working on a full audit with regulators
- His comments on Tether come after the team at Paxos, stated that USDT and USDC are not regulated digital assets since they are backed by illiquid and risky debt obligations
The CTO at both Bitfinex and Tether, Paolo Ardoino, has commented via Twitter that Tether ‘will keep leading the pack in transparency and will improve on the communication side’. Mr. Ardoinio also explained that Tether was working on a full audit of its reserves as well as working with regulators. He also added that Tether was working on ‘some amazing developments’ for this year and 2022, as highlighted in the following two tweets.
9. #tether will keep leading the pack in transparency and will improve on the communication side. There are some amazing developments we’re working on some for this year and some will come next year, we will never stop innovating.
— Paolo Ardoino (@paoloardoino) July 22, 2021
A Full Tether (USDT) Audit is ‘Months’ Away
Mr. Ardoino’s comments on the progress at USDT came a few hours after he and the General Counsel at Tether, Stuart Hoegner, had featured in a CNBC interview where they answered questions on the stablecoin’s transparency and the assets backing it.
During the interview, Mr. Hoegner had also stated that Tether was working towards getting financial audits done and the process would take ‘months, not years’.
Paxos Claims Neither USDT nor USDC is a Stablecoin
The resurgence of the discussion surrounding Tether’s backing and transparency was ignited by the team at Paxos, who had earlier concluded that neither USDC nor USDT was a regulated digital asset.
According to the team at Paxos, neither USDC nor USDT has a regulator. Additionally, each of them was backed by ‘illiquid and risky debt obligations’ that create ‘undue risks for their customers’.
The analysis by Paxos went on to conclude that USDC and Tether were unregulated stablecoins due to the following reasons.
– The USDC and Tether reserves are backed substantially by corporate debt obligations.
– The consumer is not protected or guaranteed to get their dollars back when they redeem the token.
– There is illiquidity risk because these investments have maturities as long as several years.
– There is credit risk from a corporate default.
– There is interest rate risk that can impair the value of longer maturity securities.
– In the case of USDC, reserves are held on Circle’s balance sheet, implying that Circle views USDC reserves as its own property.
– The issuer can (and often does) use consumer funds to pursue risky high-yield investments for its own financial gain.