• About Us
  • Privacy Policy
  • info@cryptonews24.co.uk
  • Friday, April 23, 2021
    CryptoNews24
    Advertisement
    • Crypto News
      • Bitcoin
      • Ethereum
      • Ripple
    • Crypto Games
    • Blockchain
    • Finance
    • Fintech
    • Regulation
    • Blog
    No Result
    View All Result
    • Crypto News
      • Bitcoin
      • Ethereum
      • Ripple
    • Crypto Games
    • Blockchain
    • Finance
    • Fintech
    • Regulation
    • Blog
    No Result
    View All Result
    CryptoNews24
    No Result
    View All Result

    Imagine Regulators Shutting Tether Down

    October 18, 2020
    in Crypto News
    Reading Time: 4min read
    A A
    Imagine Regulators Shutting Tether Down
    0
    SHARES
    84
    VIEWS
    ShareShareShareShareShare

    Source: Adobe/promesaartstudio

    Bitcoin (BTC), as a cryptoasset, is tethered to tether (USDT) tightly. Ever since becoming tradable in 2015, USDT has come to occupy an increasingly important part of the bitcoin and wider cryptocurrency ecosystem.

    Now, USDT is the third-biggest token by market capitalization, and by virtue of being pegged 1:1 to the US dollar, it has long provided an on-ramp and safe haven for millions of traders.

    But with Tether already facing legal actions, what would happen to BTC and its price if it were to cease operations? Moreover, even some analysts warned recently that Tether and other stablecoins may face an uncertain future as governments step up their regulatory scrutiny of the sector.

    According to industry players speaking with Cryptonews.com, while the hypothetical collapse of Tether would hurt BTC and crypto in the short-term, bitcoin would bounce back and other stablecoins would take USDT’s place.

    ‘Regulators go slowly’

    Tether has attracted controversy from much of the media. It has also attracted the attention of financial regulators, something which could be very ominous for the stablecoin, and for crypto.

    “So far, the only regulator taking action is the New York Attorney General – but the US Commodity Futures Trading Commission (CFTC) has subpoenaed information from iFinex, [the operator of Tether,] before,” said David Gerard, noted cryptocurrency skeptic and the author of the forthcoming “Libra Shrugged: How Facebook Tried to Take Over the Money.”

    “But regulators go slowly, and in fine detail. So I wouldn’t try to put a timescale on it,” he added.

    Given that the CFTC charged BitMEX this month with “illegally” operating a cryptocurrency derivatives trading platform, it can’t be ruled out that the regulator also has Tether and Bitfinex, also operated by iFinex, in its sights. According to Bitcoin Cash (BCH) developer Amaury Séchet it may not be the only regulator.

    “It is probably already ongoing,” he told Cryptonews.com, in response to the question of whether other regulatory bodies may launch cases against Tether/Bitfinex/iFinex in the future.

    Assuming that the CFTC and perhaps other regulators target Tether (in addition to the New York Attorney General), the consequences of charges — and particularly convictions — may be steep. Indeed, BitMex CEO Arthur Hayes (among other BitMex staff) potentially faces up to five years in prison for allegedly violating the Bank Secrecy Act.

    Investor protection

    Let’s say the New York Attorney, the CFTC or someone else for some yet unknown reason somehow stops Tether from operating. What happens to the price of bitcoin and the wider cryptocurrency market?

    According to OKEx CEO Jay Hao, the effects of Tether’s closure could be catastrophic if it’s allowed to happen all at once.

    “Tether is the third-largest cryptocurrency with a market [capitalization] of over USD 15 billion. It’s also by far the most popular stablecoin,” he reminded.

    Hao added that USDT occupies an extremely important place in the crypto ecosystem.

    As such, “If Tether were prevented from operating it would most likely have to take place over a staggered period of time to protect investors and all players in the space and minimize the impact of its exit.”

    JP Koning, an analyst and writer with the American Institute of Economic Research, also suspects that Tether’s collapse could be a disaster for crypto.

    He told Cryptonews.com, “Tether is one of the most popular mediums of exchange in the cryptocurrency world. It is also the main unit of account. That is, most other cryptocurrency prices are denominated in terms of tethers. So yes, if Tether were to somehow be prevented from operating, it would be devastating to the cryptocurrency market.”

    It’s hard to quantify “devastating” here. The infamous 2018 University of Texas study claimed that Tether was responsible for as much as 50% of bitcoin’s rise in late 2017, but in 2019, the same researchers changed their claims that were also dismissed by crypto industry players. Also, other studies (including one funded by Ripple) have suggested there’s basically no significant connection between Tether supply and bitcoin price movements.

    Either way, because the crypto market is so dependent on USDT for liquidity, it’s highly likely that the stablecoin’s disappearance would have a noticeably big impact on prices.

    “Tether supplies most of the liquidity in the crypto trading system — this is the trading case for stablecoins,” said David Gerard. “So I would expect price issues straight away.”

    Amaury Séchet suspects that even the best-case scenario would still be damaging for crypto.

    “At best, it will cause a drop in liquidity in markets. But it may also be devastating as you point out and cause a massive contraction of the whole crypto market,” he said.

    Crypto will continue

    Fortunately, most commentators seem to be unanimous in the view that crypto would continue without USDT, and that over the medium- to long-term other stablecoins would climb to take its place.

    “If we have learned anything over the years, it’s that Bitcoin and the wider cryptocurrency space are very resilient. Bitcoin has been officially declared dead by mainstream media, thought leaders, developers, and more, hundreds of times and yet it is still thriving and becoming scarcer, more robust and widely adopted,” said Jay Hao.

    Hao pointed to USD Coin (USDC) and TrueUSD as two of the likeliest candidates to replace Tether. He also noted that new stablecoins are emerging on a nearly regular basis.

    “Innovation and perseverance are core qualities of this space and I think that BTC would recover (and has recovered in the past) from any serious incident,” the CEO concluded.
    ___
    Learn more:

    King of Stablecoins, Tether, Faces Regulatory Uncertainties – Report
    Stablecoins Might Be Better Than Bitcoin For Payments, But Maybe Not For Long
    Demand for ‘Internet Dollars’ to Increase – Circle CEO; Not All Celebrate
    Is Stablecoin Business Model Stable Or Is It Endangered?
    Crypto Market Ignores Tether’s Backing News
    Exclusive: “There Is an Organized Campaign Against Us,” Says Tether

    Credit: Source link

    ShareTweetSendSharePin
    Previous Post

    Here’s Why Bitcoin Breaking Higher Now Would Trigger a Massive Move

    Next Post

    Blockchain to curb fake news

    Related Posts

    South Korean Crypto Grannies and Grandpas Shoot for the Moon
    Crypto News

    South Korean Crypto Grannies and Grandpas Shoot for the Moon

    April 22, 2021
    New Generation of ‘Bitconnectors’ Flock into SafeMoon Despite Warnings
    Crypto News

    New Generation of ‘Bitconnectors’ Flock into SafeMoon Despite Warnings

    April 22, 2021
    The Case Of Mobile Money In Ghana
    Crypto News

    The Case Of Mobile Money In Ghana

    April 21, 2021
    JPMorgan ‘Worried’ Over Bitcoin Price As Altcoins Leave BTC in the Dust
    Crypto News

    JPMorgan ‘Worried’ Over Bitcoin Price As Altcoins Leave BTC in the Dust

    April 21, 2021
    Load More
    Next Post
    Blockchain to curb fake news

    Blockchain to curb fake news

    Leave a Reply Cancel reply

    Your email address will not be published. Required fields are marked *

    Premium Content

    Ethereum Corrects Rally, But 100 SMA Could Spark Fresh Increase

    Ethereum Corrects Rally, But 100 SMA Could Spark Fresh Increase

    April 16, 2021
    Intel, Snap, Silicon Labs, Boston Beer & more

    Intel, Snap, Silicon Labs, Boston Beer & more

    April 22, 2021
    Dogecoin army’s campaign to drive crypto to $1 was a bust — so why are the feeling vindicated?

    Dogecoin army’s campaign to drive crypto to $1 was a bust — so why are the feeling vindicated?

    April 21, 2021
    Are Security Tokens now called Stock Tokens and are they like like an ADR on a legacy exchange?

    Are Security Tokens now called Stock Tokens and are they like like an ADR on a legacy exchange?

    April 19, 2021
    Stock futures mixed ahead of major corporate earnings

    Stock futures mixed ahead of major corporate earnings

    April 20, 2021

    Welcome to cryptonews24, the number one source of news and information in the cryptocurrency sphere
    We have taken our time to bring together the most reliable and the most sought after source of news and information in the crypto sphere. From Startups, Fintechs,Sports,Health,Wealth,ICos, IEos,Exchanges, Wallets, to all other happenings in the crypto world.
    Subscribe to our telegram and twitter channel for minute by minute updates.
    Please contact us for your reviews, articles, marketing and any other cryptocurrency and blockchain related events

    What's New Here

    South Korean Crypto Grannies and Grandpas Shoot for the Moon

    South Korean Crypto Grannies and Grandpas Shoot for the Moon

    April 22, 2021
    Anonymous Dogecoin Holder Donates Profits to a Dog Shelter in Florida – Altcoins Bitcoin News

    Anonymous Dogecoin Holder Donates Profits to a Dog Shelter in Florida – Altcoins Bitcoin News

    April 22, 2021

    Subscribe Now

    Loading

    © 2020 cryptonews24.co.uk - All rights reserved!

    No Result
    View All Result
    • Crypto News
      • Bitcoin
      • Ethereum
      • Ripple
    • Crypto Games
    • Blockchain
    • Finance
    • Fintech
    • Regulation
    • Blog

    © 2020 cryptonews24.co.uk - All rights reserved!

    • YAMYAM(YAM)$1.40-98.56%
    • bitcoinBitcoin(BTC)$49,165.00-9.66%
    • ethereumEthereum(ETH)$2,196.95-10.25%
    • Binance CoinBinance Coin(BNB)$487.18-12.01%
    • tetherTether(USDT)$1.00-1.03%
    • rippleXRP(XRP)$1.02-22.88%
    • cardanoCardano(ADA)$1.04-14.07%
    • polkadotPolkadot(DOT)$29.29-13.12%
    • dogecoinDogecoin(DOGE)$0.200525-29.15%
    • UniswapUniswap(UNI)$31.46-13.60%